Accumulated Depreciation
A contra-asset account showing the total depreciation recorded for an asset since acquisition, reducing its carrying value on the balance sheet.
Accumulated Depreciation
A contra-asset account that reflects the total depreciation recorded for an asset since its acquisition, representing the portion of the asset’s cost that has been allocated as an expense over its useful life.
For instance, a delivery truck purchased for $60,000 with a 5-year useful life might have accumulated depreciation of $36,000 after 3 years using straight-line depreciation, resulting in a net book value of $24,000 on the balance sheet.
Accumulated depreciation allows companies to track both the original cost of an asset and its gradual consumption over time. This approach maintains historical information while presenting the asset’s current carrying value, enhancing transparency in financial reporting.