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Fixed asset GL accounts/ Depreciation
I have a question about entering in the fixed asset GL accounts. If an asset was purchased 3 or 4 years ago and already paid for, how do we enter it in the journal? For example, if we bought furniture 3 years ago we would put an entry to debit office equipment/ credit loan payable. Debit loan payable/ credit A/P. Debit AP /credit cash. If the furniture was paid off using cash from 2 years ago, how do we balance it, if we input it today. (Not from an accounting background) Let me know if I'm not making any sense.
Depreciation is also done by percentage on webERP. If using a straight line method of depreciation and we put the rate at 20%, would this mean that the cost of an asset would depreciate 1/5th of its value evenly every year for 5 years? Or does this mean that 20% of the assets current value gets depreciated, each time the depreciation is committed based on a selected depreciation date?
Any help is greatly appreciated.
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