Accumulated depreciation
Financial Accounting glossary · Assets: Cash, Receivables, Inventory, PP&E & Intangibles
Definition
Cumulative depreciation expense recorded against an asset since acquisition; presented as a contra-asset.
Accumulated depreciation in plain English
Big assets like machines or vehicles wear out slowly, so instead of counting the whole cost as an expense the day you buy them, accounting spreads that cost out over the years you use them — each year's slice is called depreciation. Accumulated depreciation is the running total of all those slices added up since you got the asset. It's called a "contra-asset" because it sits on the books as a subtraction: you show the item's original price, then subtract this total to reveal what it's worth now on paper. Like a $20,000 delivery van that you write down by $4,000 a year — after three years, $12,000 of accumulated depreciation shows it's been well used.
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