Account Depreciation thx

1) nature of each accounts
MACHINERY and PROVISION FOR DEPRECIATION A/C - balance sheet item
the bal amount should been carried forward to next year. use the BAL B/F to represent the bal amount of the CURRENT YR and use BAL C/F to represent that the amount is carried from the last year.
Depreciation a/c - profit & loss item
the bal amount will automatically transfer to profit & loss a/c in order to calculate PROFIT or LOSS for the CURRENT YEAR.
2) a/c entry
2a) record buy new asset
Oct 31, 2007
Dr Machinery $18,000 Cr Bank $18,000
2b) calculate depreciation for year end
Dec 31, 2007
Dr Depreciation a/c $1800 Cr Prov for Depreciation a/c $1800
Please remember that account principle - double entry i.e. DR = CR
Now, you tell me that how to close the provision for depreciation a/c at the year end.
From the point 2b), you know that you have CR entry in the PROVISION FOR DEPECIATION AND this a/c is belong to B/S item. This means that you the bal amount cannot transfer to P/L a/c for closing. Under this situation, you only have ONE method can do - add one more entry to the a/c in the DR entry to carry the amount to the new a/c book i.e. next financial year.
the description is Bal c/f $1800

Provision for depreciation is a liability account.
Only Income and expenditure will close after making profit and loss account.
In 1/1/2008, the status of the machinery will be:
machinery account: dr 18000
provision for depreciation account: cr 1800
i.e. net asset value=16200

c/f 即是 carry forward, 即是帶落下一年 !!

至於 credit balance, 是因為上年年尾是 debit side, 要對充番, oppsite side 嘛 !
所以credit balance ! 當你再開始入數時, 咪又係在 debit side 開始 !!