Accumulated Depreciation is a term used in accounting to refer to the total amount of depreciation expense that has been recorded and accumulated over the useful life of a tangible asset. It represents the reduction in the value of an asset due to wear and tear, obsolescence, or other factors. Accumulated Depreciation is a contra-asset account, meaning it is subtracted from the original cost of the asset to determine its net book value. It is typically presented on the balance sheet as a negative amount and is used to reflect the decrease in value of an asset over time.
Accumulated depreciation refers to the total depreciation expense that has been recorded for an asset or group of assets over its useful life. It represents the reduction in the value of an asset due to wear and tear, obsolescence, or other factors. Accumulated depreciation is a contra-asset account that is subtracted from the original cost of the asset to determine its net book value. It is important for financial reporting purposes as it helps in accurately reflecting the true value of an asset on a company’s balance sheet.
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This glossary post was last updated: 29th March 2024.
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