depreciation type of account

Depreciation is classified as a contra asset account in accounting. This type of account reduces the value of a corresponding asset on the balance sheet over time due to factors like wear and tear or obsolescence. Unlike asset accounts that increase in value, depreciation accounts accumulate as a negative value against the asset’s original cost. Understanding depreciation and how it affects financial reporting is essential for accurate tax reporting and proper asset management. Learn about the different depreciation methods and how they impact your financial statements