an accumulated depreciation account

An accumulated depreciation account is a contra asset account that tracks the cumulative depreciation of a fixed asset over time. Instead of reducing the value of the asset directly, accumulated depreciation is recorded separately to reflect the asset's decrease in value due to wear and tear, obsolescence, or age. This account helps businesses report the asset’s net book value on the balance sheet, ensuring that the current value of the asset is accurately reflected after accounting for depreciation. It is important for financial reporting and compliance with accounting standards.