Provide an example of a journal entry for depreciation using straight-line method on a $50,000 asset with $5,000 residual value and 5-year life.

• A. Debit Depreciation Expense $9,000; Credit Accumulated Depreciation $9,000
• B. Debit Accumulated Depreciation $9,000; Credit Depreciation Expense $9,000
• C. Debit Cash $9,000; Credit Depreciation Revenue $9,000
• D. Debit Depreciation Expense $4,500; Credit Accumulated Depreciation $4,500

Answer: (A)

Depreciation spreads the asset’s cost minus its residual value over its useful life, recorded as an expense and as an increase in accumulated depreciation. Using straight-line, annual depreciation = (cost − residual value) / useful life = (50,000 − 5,000) / 5 = 9,000. The correct entry is to debit Depreciation Expense for 9,000 and credit Accumulated Depreciation for 9,000. This reflects the expense on the income statement and increases the contra-asset account, reducing the asset’s net book value (50,000 − 9,000 = 41,000). The other options don’t fit: reversing the debits/credits is incorrect for depreciation, depreciation isn’t a cash or revenue item, and 4,500 doesn't match the straight-line calculation with the given values.