 in this discussion we will discuss the discussion question of describe depreciation and what is needed to calculate it. So depreciation is going to be something that will be related to property plants and equipment. So if we see an essay question like this we may want to have a quick start in terms of what is property plant and equipment so that we can then talk about the depreciation related to it. So property plants and equipment is going to be something that is going to be a fixed asset, typically a tangible asset. It's typically something that's going to have a useful life more than a year and therefore we put it on the books as an asset rather than expensing it at the point of purchase and then we need to allocate that cost to the useful life in which it will be used. That will be the process of depreciation. When we think about depreciation we might want to start off with a journal entry because that can really help us to jog our memory as to what is going on. If nothing else if we don't know anything else about depreciation just saying what the debit and credit are and then what the effect is on the account equation could pick up points from there. So depreciation the journal entry for is the debit depreciation expense credit accumulated depreciation. So we pretty much just want to memorize that and then you can kind of think through that what is that doing. Depreciation expense is an expense account which is going to increase the expense with a debit expense is always pretty much go up and that'll bring net income down. So when we record depreciation what are we doing? We're allocating a cost of the equipment and we're decreasing the net income or increasing an expense and decreasing net income. The other side of it is a little bit more confusing because it doesn't have the word expense in it so it's called accumulated depreciation. It also has a credit balance which is confusing because it's actually an asset account and assets typically have a debit balance. So the accumulated depreciation is our contra asset account and that means that it's an asset account with a account balance contra to the norm a credit balance rather than a debit balance and that is going to actually be reducing the assets. So it's reducing the value of the assets that are still on the books. So depreciation is the recording of the expense. It's the allocation of the expense for the cost of the equipment over that equipment's useful life and what we're going to do is record the expense and the other side will be accumulated depreciation and the accumulated depreciation will help us to record the book value and show our reader a couple different things. One it'll show them what the cost is because we didn't write down the actual property plans and equipment. It'll show how much we think the estimated accumulated depreciation the accumulated decline in value is and then it'll show us the book value by subtracting the two. To calculate depreciation we're going to need a few different factors. We're going to need to know the cost of the equipment the useful life of the equipment and the salvage value. We could use a few different ways to calculate depreciation straight line method. We could use some accelerated method like double decline in balance method. We can use a units of production type method in order to calculate the depreciation.