In connection with asset depreciation, it refers to the amount of depreciation written off to date. In other words, it is the accumulated decrease in the value of an asset (usually a long-term tangible asset) over the course of its useful life.

By nature, accumulated depreciation is classified as a contra asset (its balance is opposite that of a related asset and hence it has a negative balance- e.g., accumulated depreciation for machinery, furniture, office equipment, and so on). It also carries a credit balance: an increase reflects a credit entry as the effect of which will be to reduce the value (carrying value) of the asset (and by default, an asset is decreased by a credit). At the end of every month, depreciation is recorded using the following accounting double entry:

Depreciation expense (debit)

Accumulated depreciation (credit)

On the statement of financial position/ SFP (balance sheet), accumulated depreciation appears as a reduction in the book value (carrying value) of a respective asset (suppose here: office equipment):

Office equipment

Less: accumulated depreciation

= Net carrying value of office equipment at the date of SFP