accumulated depreciation is contract to what account?
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.he 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. Accumulated depreciation is a contra-asset account and show in the asset section of the Balance Sheet. It is called contra-asset account because contrary to any asset account … Acc. Dep. is a credit type of account.The offset of Accumulated depreciation is to Debit the expense account Depreciation.t is called contra-asset account because contrary to any asset account … Acc. Dep. is a credit type of account. The offset of Accumulated depreciation is to Debit the expense account Depreciation. An asset's book value equals the asset cost minus Accumulated Depreciation. If the cost is $10,000 and accumulated depreciation is $3,000, the book value is $7,000. An asset's depreciable cost equals the asset cost minus salvage value.Tony purchases a truck with cost of $20,000 and salvage value of $4,000.The depreciable cost would be $16,000.he asset's cost; The asset's expected salvage value, which is the amount that the asset can be sold for at the end of its useful life; The number of years of useful life. Keep in mind that the depreciation entry is usually performed as an adjustment at the end of an accounting period. 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.egardless 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. For example, ABC International buys a machine for $100,000, which it records in the Machinery fixed asset account. ABC estimates that the machine has a useful life of 10 years and will have no salvage value, so it charges $10,000 to depreciation expense per year for 10 years.he 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. As long as the asset is on the balance sheet, the accumulated depreciation needs to be as well. 1  For example, after ten years, the asset in the example above will still be recorded on the balance sheet at its cost of $10,000. You will then open the Accumulated Depreciation account, and enter a credit entry for $1,000. 2  In doing this, you have made the year's $1,000 in depreciation for the asset appear as an expense on the income statement. 3  You are also increasing accumulated depreciation by $1,000. If you know how long an asset is of use, and what the salvage value (or the left over value at the end of the period) is, you can determine your yearly depreciation expense. 1  For example, imagine your firm purchases a piece of machinery for $10,000. 2  The machinery is expected to last ten years and has no salvage value. You will then open the Accumulated Depreciation account, and enter a credit entry for $1,000. 2  In doing this, you have made the year's $1,000 in depreciation for the asset appear as an expense on the income statement. 3  You are also increasing accumulated depreciation by $1,000. 1 To record the journal entry, debit Accumulated Depreciation for $10,000 and credit Equipment for $10,000. 2  This reduces the equipment asset account by the value of the machine, and reduces the accumulated depreciation contra-asset account. 3  The end result is that the asset is removed from the balance sheet. You will then open the Accumulated Depreciation account, and enter a credit entry for $1,000. 2  In doing this, you have made the year's $1,000 in depreciation for the asset appear as an expense on the income statement. 3  You are also increasing accumulated depreciation by $1,000. 1 You will then open the Depreciation Expense account (or create the account if it is not already there by using the create account feature in the software you are using), and enter a debit entry for $1,000. 2  You will then open the Accumulated Depreciation account, and enter a credit entry for $1,000. You will then open the Accumulated Depreciation account, and enter a credit entry for $1,000. 2  In doing this, you have made the year's $1,000 in depreciation for the asset appear as an expense on the income statement. 3  You are also increasing accumulated depreciation by $1,000. If the related account is an asset account, then a contra asset account is used to offset it with a credit balance. If the related account is a liability account, then a contra liability account is used to offset it with a debit balance.The Contra Asset Account. The most common contra account is the accumulated depreciation account, which offsets the fixed asset account.f the related account is an asset account, then a contra asset account is used to offset it with a credit balance. If the related account is a liability account, then a contra liability account is used to offset it with a debit balance. The Contra Asset Account.
Fixed asset account