Although it is true that some capital assets are not replace

Although it is true that some capital assets are not replaced, in most situations, projected capital expenditures are less than present allowance-for-depreciation balances.

Solution

Depreciation is generally recorded in a separate account and disclosed on the balance sheet as accumulated depreciation. Without an accumulated depreciation account on the balance sheet, depreciation expense is usually charged against the relevant asset directly. The values of the fixed assets stated on the balance sheet will decline, even if the business has not invested in or disposed of any assets. Otherwise, depreciation expense is charged against accumulated depreciation. Showing accumulated depreciation separately on the balance sheet has the effect of preserving the historical cost of assets on the balance sheet. If there have been no investments or dispositions in fixed assets for the year, then the values of the assets will be the same on the balance sheet for the current and prior year.