An account whose balance is opposite the balance in its related account (the so-called paired account). For instance, accumulated depreciation is an account that captures the decrease in the recognized value of an asset due to wear and tear. This account carries a credit balance: an increase in accumulated depreciation is a credit, i.e., a decrease in the amount or value of assets (asset account is  decreased by a credit). The double entry for recording depreciation at the end of a financial period is:

Depreciation expense (Debit)

Accumulated depreciation (Credit)

The balance of a contra account appears on the statement of financial position (SFP) as a deduction from its paid account, and the net amount is dubbed “carrying value” or book value of the asset in question. This amount declines with the passage of time, as the balance of a contra account (in this case, accumulated depreciation) increases.

Another example of a contra asset is allowance for doubtful accounts (which is deducted from notes and accounts receivable).