On January 1, 2022, Wheeler Inc purchases a building for $800,000 and places it into service. When Wheeler Inc records depreciation on the building on December 31, 2022, it will increase depreciation expense and
a. increase accumulated depreciation
b. decrease the asset, Building
c. decrease cash
d. increase accounts payable.
a. increase accumulated depreciation
When Wheeler Inc records depreciation on the building on December 31, 2022, it will increase depreciation expense and:
a. Increase accumulated depreciation.
Depreciation expense is the amount that is recorded each accounting period to allocate the cost of the building over its useful life. Accumulated depreciation, on the other hand, represents the total depreciation expense recorded over the life of the asset. So, when depreciation is recorded, both the depreciation expense and accumulated depreciation accounts increase.