Buildings
Definition: Structures used in operations
Scope:ModerateDifficulty:Very Easy
Structures used in operations
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Purchase building | ||
| Buy building for $500,000; $100,000 down, $400,000 mortgage. | ||
| BuildingsAsset+ | $500,000 | |
| CashAsset− | $100,000 | |
| Mortgage PayableLiability+ | $400,000 | |
| Asset acquired with mixed financing. | ||
| 2. Record annual depreciation | ||
| Straight-line: ($500,000 − $50,000) / 40 yr = $11,250. | ||
| Depreciation ExpenseExpense+ | $11,250 | |
| Accumulated Depreciation — BuildingsContra Asset+ | $11,250 | |
| Carrying value declines each period. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
BuildingsBuildingsAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$500,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$500,000.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$100,000.00
$100,000.00
Mortgage PayableMortgage PayableLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$400,000.00
Normal bal. ▶
$400,000.00
Depreciation ExpenseDepreciation ExpenseExpenseA cost incurred in the process of earning revenue. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$11,250.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$11,250.00
Accumulated Depreciation — BuildingsAccumulated Depreciation — BuildingsLiabilityAn obligation the business owes to others. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$11,250.00
Normal bal. ▶
$11,250.00
DurationLong-Term
External Links
- Building — Wikipedia