Accounting for depreciation involves recording depreciation expense and accumulated depreciation. Journal entry: Debit Depreciation Expense/P&L Account, Credit Accumulated Depreciation (contra asset account). Accumulated Depreciation is shown on the balance sheet as a deduction from Gross Fixed Asset, showing Net Book Value. Fixed Asset account maintains original cost; it is not reduced by depreciation. The contra account approach provides transparency by showing both original cost and depreciation. Depreciation is reflected in P&L account (expense) reducing profit. On balance sheet, assets show: Gross Value - Accumulated Depreciation = Net Book Value. At year-end, depreciation for the year is calculated and recorded. When partial year depreciation applies (acquisition or disposal during year), careful dating is essential. Different classes of assets (land, building, plant, equipment) may have different useful lives and methods. Depreciation calculation must consider when asset becomes available for use, not when it is purchased. Depreciation ceases when asset is disposed or when it is fully depreciated. Fully depreciated assets (cost equal to accumulated depreciation) may continue to be used with no further depreciation. Exam tip: Master the journal entry for depreciation; understand the balance sheet presentation; practice calculating partial period depreciation correctly; know when depreciation starts and stops.