How to Book Fixed Assets and Depriciation

Fixed Assets (Property, Plant and Equipment) are long-lived assets that support the company's operations. Most fixed assets are used consistently and continuously, and so they should be depreciated over time to allow the expense of using the asset to match the revenue generated by or linked to their use. Fixed assets are typically grouped by type, such as Furniture, Computer Equipment, Buildings. Fixed assets that are individually small but purchased as a large group should often be bundled together.
As an example, a company is setting up a new office and buys 100 office chairs at $420 each (inclusive of shipping and taxes). Individually these chairs are below the company's capitalization policy, but as part of the new office setup, these chairs should be depreciated. The purchase entry is:

Debit: Furniture $42,000
Credit: Accounts Payable/Cash $42,000

The company has a policy that furniture has a useful life of seven years. The entry to record monthly depreciation expense is:
Debit: Depreciation Expense $500
Credit: Accumulated Depreciation of Furniture $500

A year later, the company needs to dispose of 10 chairs that have broken and cannot be repaired. This entry is:
Debit: Loss on Disposal of Fixed Assets $3,600
Debit: Accumulated Depreciation of Furnture $600
Credit: Furniture $4,200