accumulated depreciation in accounting

Accumulated depreciation in accounting is a contra asset account used to track the reduction in value of a company’s fixed assets over time. It reflects the wear and tear, obsolescence, or aging of assets like machinery, buildings, and equipment. Rather than directly reducing the asset's value, accumulated depreciation is recorded separately, helping businesses maintain accurate financial statements. Understanding accumulated depreciation is essential for managing asset valuation, calculating tax deductions, and ensuring compliance with accounting standards.