If A Company Fails To Record Depreciation Expense
If complete journal entry of depreciation expense is omitted or not recorded, then it also affects assets side on balance sheet.
The adjusting entry to record depreciation expense is shown below:
Depreciation Expense a/c XXX
Accumulated Depreciation a/c XXX
(Depreciation Recorded for the Period)
Accumulated Depreciation is a Contra Asset Account which if not deducted from Fixed Assets or Non Current Assets on balance sheet, then assets side is overstated or in other words, total assets are overstated.
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