I am in a real slump! I'm in need of assistance! I am really confused with the straight-line depreciation method. If there was an office equipment with a salvage value of $3000 and has a 5 year useful life, but it has been used for a year and 2 months. Do I minus the one year and two months from the 5 year useful life?

And I know I would have to minus something from the retained earnings, but I just don't know how to get my foot in the door...

Does anyone know what I am doing wrong?

HELP!

I don't understand what you're trying to accomplish. Depreciation should have an adjusting entry each year and will not affect retained earnings. (Well, not directly. All revenues and expenses are eventually closed out to retained earnings.) What happens after one year and 2 months that you suddenly need to make an entry at this point in time?

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Originally Posted by accountingmajor

I am in a real slump! I'm in need of assistance! I am really confused with the straight-line depreciation method. If there was an office equipment with a salvage value of $3000 and has a 5 year useful life, but it has been used for a year and 2 months. Do I minus the one year and two months from the 5 year useful life?!

And I know I would have to minus something from the retained earnings, but I just don't know how to get my foot in the door...

Does anyone know what I am doing wrong?

HELP!

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Yes you would. In essence you can set up and compute the monthly charge for depreciation, make an adjustung entry to corect the depreciation to reflect a charge to the account for 14 months.