Definition of Accumulated depreciation:
The matching principle under generally accepted accounting principles (GAAP) dictates that expenses must be matched to the same accounting period in which the related revenue is generated. Through depreciation, a business will expense a portion of a capital asset's value over each year of its useful life. This means that each year a capitalized asset is put to use and generates revenue, the cost associated with using up the asset is recorded.
Accumulated depreciation is the cumulative depreciation of an asset up to a single point in its life. Accumulated depreciation is a contra asset account, meaning its natural balance is a credit that reduces the overall asset value.
Total depreciation on a tangible asset accumulated up to a specified date. This amount is subtracted from the original cost or valuation of the asset to arrive at its book value. Accumulated depreciation amount represents only the expired value of an asset; it is neither cash nor any other type of asset that can be used to buy another asset. Also called accrued depreciation.
How to use Accumulated depreciation in a sentence?
- If you are wanting to sell something you need to add up all of the accumulated depreciation to find the correct price.
- Depreciation is recorded to tie the cost of using a long-term capital asset with the benefit gained from its use over time.
- The carrying value of an asset is its historical cost minus accumulated depreciation.
- Accumulated depreciation is presented on the balance sheet just below the related capital asset line.
- I wondered what the accumulated depreciation of the item would be at the end of the year and if it would still have value.
- When you must sell a high priced item you will have to figure out all the accumulated depreciation it has since you bought it.
- Accumulated depreciation is the sum of all recorded depreciation on an asset to a specific date.
Meaning of Accumulated depreciation & Accumulated depreciation Definition