Simple depreciation entries can be made by taking the purchase price of an item and dividing it over the number of years that it will be in use. There are some guidelines for “length of use”, but nothing written in easy-to-read language, so use good judgment, and you will be fine.

When you buy a depreciating asset, you Credit your checking account and Debit the new asset account. You also Credit an asset account called “Accumulated Depreciation” for a fraction of the item’s value. (The value of the item divided by the number of year’s of use). You Debit the expense account called “Depreciation Expense”.

Note: the “Accumulated Depreciation” asset account will always be a negative number. It subtracts from the total depreciating assets and gives you an accurate amount of assets you have on hand, less their depreciating value.