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17. start the year with a zero balance. 36. The credit will be posted to the motor
vehicles:
18. Note that the balance brought down on the
cost account is a debit. 37. accumulated depreciation account.
19. This is because the double entry when we 38. The motor vehicle accounts now include all
purchase assets the entries
20. is to debit the cost account and credit cash. 39. that they need to for the year, so we can
close these accounts off.
21. You should remember this from Lesson 1.
40. The motor vehicle accounts will look like
22. Notice also that the balance brought down
this once closed off.
on the accumulated depreciation
41. At the end of the year there is a balance
23. account is a credit.
42. of $319,000 on the motor vehicles cost
24. This is because, as you saw above, the
account and $167,530 on the motor
double entry to record depreciation
43. vehicles accumulated depreciation account.
25. is to credit this account.
44. This gives a carrying amount (or net book
26. The balance brought down on this account
value)
represents the total
45. of $151,470 at the end of the year which
27. of all depreciation charged on all of the
will be the balance for motor vehicles
motor
46. that will appear in the statement of
28. vehicles of the business up until the end of
financial position.
the last financial year.
47. Further entries will be needed to the
29. We know that Tareq purchased two new
depreciation expense account
motor vehicles
48. to reflect the depreciation for all the other
30. in the year: a second-hand delivery vehicle
assets of the business.
for $15,000 and a new delivery
49. However once this is done the total on this
31. truck for $40,000.
account
32. These entries will have been posted to the
50. will be what is included in the statement of
cost account during the year.
profit or loss
33. Tareq has calculated that the total
51. as the depreciation expense.
depreciation charge for his motor
52. We've now recorded Tareq's motor vehicles
34. vehicles for the year is $34,890.
53. depreciation expense in the ledger accounts
and have closed
55.