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Accumulated depreciation is the sum of depreciation recognized to date from the start of the useful life of the asset. It can almost be thought of as a "negative asset". Accumulated Depreciation Account. It is a contra-account, meaning it reduces the value of an asset account. After the 5-year period, if the company were to sell the asset, the account would need to be zeroed out because the asset is not relevant to the company anymore. The account Accumulated Depreciation reports the total amount of depreciation expense that has been recorded from the time the asset was put into service until the date of the balance sheet. The accumulated depreciation account is an asset account with a credit balance (also known as a contra asset account); this means that it appears on the balance sheet as a reduction from the gross amount of fixed assets reported. The original cost of the asset is known as its gross cost, while the original cost of the asset less the amount of accumulated depreciation and any impairment is known as its net cost or carrying amount. for depreciation = Accumulated depreciation opening balance + Depreciation for the year - Accumulated depreciation of disposed asset In balance sheet, it is showed as a substraction from the non-current asset to which it … As a result, the statement of cash flows prepared under the indirect method adds the depreciation expense back to calculate cash flow from operations. It is a contra-asset account – a negative asset account that offsets the balance in the asset account it is normally associated with. The accumulated depreciation account is credited for the same amount. to track the total depreciation over an asset’s life. Accumulated depreciation is calculated by subtracting the estimated scrap/salvage value at the end of its useful life from the initial cost of an asset. Unlike a normal asset account, a credit to a contra-asset account increases its value while a debit decreases its value. Calculating accumulated depreciation is a simple matter of running the depreciation calculation for a fixed asset from its acquisition date to its disposition date. The accumulated depreciation account is an asset account with a credit balance (also known as a contra asset account); this means that it appears on the balance sheet as a reduction from the gross amount of fixed assets reported. In trial balance, the accumulated depreciation expenses are the contra account of the fixed assets accounts. Over time, the accumulated depreciation balance will continue to increase as more depreciation is added to it, until such time as it … For tangible assets such as property or plant and equipment, it is referred to as depreciation. Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its life. 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