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The journal entry for depreciation contains a debit to the income statement account Depreciation Expense and a credit to the balance sheet account Accumulated Depreciation.
It is important to realize that when the depreciation expense entry is recorded, a company's net income is reduced by the expense, but its cash is not reduced. (Cash would have been reduced when the asset was acquired.) You should also realize that depreciation is an estimate based on the asset's historical cost (not its replacement cost), its estimated useful life, and its estimated salvage value.
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