Accumulated Depreciation
Accumulated Depreciation is the cumulative amount of depreciation expense recorded against a tangible fixed asset since it was acquired, reducing its gross carrying value to reflect wear, tear, and obsolescence.
Example: A factory purchases machinery for $500,000 and uses straight-line depreciation over 10 years. After three years, annual depreciation is $50,000 and accumulated depreciation totals $150,000, reducing the machinery's net book value to $350,000 on the balance sheet.
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