Hugo Posted October 7, 2010 Report Share Posted October 7, 2010 anybody there tha can help me would be real appreciated. How to balance the balance sheet when real estate property is depreciated annually?. Client has an investment property worth $400,000 (apartments unit) paid $100,000 down and has a mortgage of $300,000. at the very beggining his balance sheet is: assets= $400,00 liabilities= $300,000 equity = 100,000 After a year there is $15,000 in depreciation (just an example). the asset in the balance sheet is reduced by this depreciation. How dowe treat this depreciation in the balance sheet so it balances ?? Your input is really appreciated Hugo Quote Link to comment Share on other sites More sharing options...
rfassett Posted October 7, 2010 Report Share Posted October 7, 2010 The depreciation is credited to accumulated depreciation - a contra-asset account and debited to depreciation expense - an income statement account. The income or loss on the income statement closes to retained earnings on the balance sheet. building 400,000 accumulated depreciatation 15,000 mortgage payable 300,000 equity 100,000 retained earnings (deficit) 15,000 Quote Link to comment Share on other sites More sharing options...
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