Accumulated Depreciation
Barron's Real Estate Dictionary:
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Accumulated Depreciation
In accounting, the amount of depreciation expense that has been claimed to date. Same as accrued depreciation.
See adjusted tax basis.
Example: A building was bought for $100,000. The annual straight - line depreciation expense is $2,500. The accumulated depreciation in 3 years is $7,500.
See adjusted tax basis.
Example: A building was bought for $100,000. The annual straight - line depreciation expense is $2,500. The accumulated depreciation in 3 years is $7,500.
| Accrued Interest, Accrued Expense | |
| Acknowledgment, Acquisition |
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Accumulated Depreciation
Barron's Accounting Dictionary:
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Accumulated Depreciation
Sum of depreciation charges taken to date on a fixed asset. Accumulated depreciation is a contra account to the fixed asset to arrive at book value. For example, on 1/1/2007 an auto is bought costing $10,000, with a salvage value of $1000 and a life of 10 years. Using straight - line depreciation the accumulated depreciation on 12/31/2010 would be $3600 ($900 X 4).
| Accumulated Benefit Obligation (ABO), Accrued Revenue, Accrued Expenses | |
| Accumulated Earnings Tax, Accumulated Income, Accumulation |
Barron's Law Dictionary:
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Accumulated Depreciation
The total depreciation charged against all productive assets as stated on the balance sheet. The charge is made to allow realistic reduction in the value of productive assets and to allow tax-free recovery of the original investment in assets.
Investopedia Financial Dictionary:
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Accumulated Depreciation
The cumulative depreciation of an asset up to a single point in its life. Regardless of the method used to calculate it, the depreciation of an asset during a single period is added to the previous period’s accumulated depreciation to get the current accumulated depreciation.
An asset’s carrying value on the balance sheet is the difference between its purchase price and accumulated depreciation.
Investopedia Says:
A company buys an asset for $5,000 that has a five-year lifespan and zero salvage value. The company uses straight-line depreciation, and the asset depreciates at a rate of $1,000 per year.
In year one, depreciation will be $1,000, as will accumulated depreciation, and carrying value of the asset will be $4,000.
In year two, depreciation will be $1,000, accumulated depreciation will be $2,000 ($1,000 from the current year + $1,000 accumulated from previous years) and carrying value will be $3,000.
Each subsequent year will follow the same process.
Related Links:
Knowing what the company's financial statements mean will help you to anaylze your investments. Breaking Down The Balance Sheet
Companies make choices and assumptions in calculating depreciation, and you need to know how these affect the bottom line. Appreciating Depreciation
Appreciate the different methods used to describe how book value is "used up". Depreciation: Straight-Line Vs. Double-Declining Methods
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Copyrights:
Barron's Real Estate Dictionary
Dictionary of Real Estate Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
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Barron's Accounting Dictionary
Dictionary of Accounting Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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Barron's Law Dictionary
Law Dictionary. Copyright © 2003 by Barron's Educational Series, Inc. All rights reserved.
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Mentioned in
Depreciated Cost
(business term)
Unrecovered Cost
(business term)
Depreciation Allowance
(business term)
Contra-Asset Account
(business term)
» More