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BULLETIN 811, U. S. DEPARTMENT OF AGRICULTURE. 



old piece should be charged to reserve for depreciation and the new one charged to 

 Machinery and Equipment, Buildings, or Office Furniture and Equipment, as ex- 

 plained under those accounts. 



Depreciation — Plant {M4). 



Debit: 



Credit: 



1. With the amounts reserved out of 



1. 



With the debit balance at the close 



the profits of each fiscal period to 





of the fiscal period. (Debit Loss 



cover loss from wear, tear, and 





and Gain.) 



obsolescence of office furniture 







and equipment, machinery and 







equipment, and buildings. 







(Credit the corresponding reserve 







accounts.) 







Extraordinary losses caused by lightning, fire, or explosion may exceed the amount 

 reserved for depreciation. Only the portion of the reserve applicable to the damaged 

 property should be charged to the reserve account. The remaining portion of the 

 loss should be debited to an account appropriately captioned, i. e.. Fire Loss. This 

 account must be charged off to Loss and Gain during the ensiling years. This 

 method of apportioning the loss over a number of years is justifiable since the business 

 of the current year was not responsible for the extraordinary loss. In case insurance 

 is collected on account of a loss the amount should be credited to the proper reserve 

 accounts. 



Leakage in Transit {M5). 



Debit: 





Credit: 



1. With uncollectible claims. 



(Credit 



1. With the debit balance at the close 



Railroad Claims.) 





of the fiscal period. (Debit Loss 

 and Gain.) 



This method of handling losses due to leakage in transit not only gives the proper 

 grain account credit for the grain actually shipped, but it reveals the facts relative 

 to a source of loss which is often neglected entirely or given only minor consideration. 



Shrinkage and Scale Loss {M6). 



Debit: 



Credit: 



1. With any shortage in the physical 



1. With any excess of the physical over 



inventories of grain and merchan- 



the book inventory. (Debit the 



dise at the end of the fiscal period. 



grain and merchandise accounts 



(Credit the grain and merchandise 



concerned.) 



accounts concerned.) 



2. With the debit balance of the ac- 





count at the end of the fiscal 





period. (This is the net loss due 





to shrinkage and scale loss.) 





(Debit Loss and Gain.) 



The desirability of having the books show the facts relative to all sources of cost 

 necessitates the opening of an account to which may be carried discrepancies between 



