what is accumulated depreciation account

An accumulated depreciation account is a contra asset account used in accounting to track the total depreciation of a company's fixed assets over time. As assets such as machinery, buildings, and equipment lose value due to usage, wear and tear, or obsolescence, depreciation is recorded. Instead of reducing the value of the asset directly, accumulated depreciation is accumulated in a separate account. This allows businesses to maintain the original value of the asset on the balance sheet while showing the reduction in value over time. The accumulated depreciation account is important for financial reporting, tax purposes, and accurate asset valuation