Ignoring any related tax implications, what is the effect on a company's balance sheet when depreciation expense is recognized?

When depreciation is recorded in the financial books, it has two impacts as for income statement it reduces the income, which turns to be part of owner's equity later as retained earnings or profit for the year. Further, on balance sheet assets side after that there is an negative impact on the carrying value of fixed assets on which depreciation is charged, and accordingly the balance of fixed assets is decreased.

answer; blank(1); /rises; blank(2); //increases;

answer(eu) is the correct answer;