Atkins Corporation has provided the following information for the year ended Dec

Question

Atkins Corporation has provided the following information for the year ended December 31, 2016:

• The equipment account balance increased by $200,000 from the beginning of the year to the end of the year.
• The equipment accumulated depreciation account balance increased by $35,000 from the beginning of the year to the end of the year.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense recorded on the equipment during the year was $65,000.

Atkins Corporation has provided the following information for the year ended December 31, 2016:

• The equipment account balance increased $200,000.
• The equipment accumulated depreciation account increased $35,000.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense recorded on the equipment during the year was $65,000.

***My questions - I am getting confused between accumulated depreciation and depreciation expense. The depreciation expnse recorded on the equipment for the year was $65,000. The equipment's accumulated depreciation account increased $35,000. How can the increase in accumulation be less than the actual expense? I'm very confused - please explain.***

Explanation / Answer

The accumulated depreciation amount has been reduced due to the sale of the equipment during the year costing $50000, the accumulated depreciation does not include the depreciation on account of sale of equipment which is (65000-35000) = $30000. Hence, the difference in the accumulated depreciation.

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