depreciation account

A depreciation account is used in accounting to track the reduction in value of a fixed asset over time due to wear, tear, or obsolescence. Depreciation is recorded as an expense on the income statement and as a contra asset on the balance sheet, where it offsets the original cost of the asset. The purpose of this account is to reflect the asset's declining value and spread the cost of the asset over its useful life. This helps businesses maintain accurate financial statements and ensures compliance with accounting standards and tax regulations.