A contra account that is deducted from an asset account to arrive at the asset’s net book value. An example of a contra asset is accumulated depreciation (that is deducted from its paired account: a fixed asset account) and allowance for doubtful accounts / allowance for bad debts (that is deducted from notes and accounts receivable).

A contra asset is reported on the statement of financial position immediately beneath the asset account with which it is paired. The contra asset account has a negative credit balance and as a result it reduces the net reported value of the respective asset account.

Another example is an inventory account which is paired with an allowance for obsolete inventory contra account. The net inventory balance is arrived at by deducting the balance of the contra asset account from the balance of the inventory account.