Q. Example of accumulated depreciation account?
The accumulated depreciation account doesn't represent cash that is being set aside to change the worn out asset. The un-depreciated cost of the asset is a debit balance in the asset account (original cost) minus the credit balance in the accumulated depreciation contra account. Accountants as well refer to an asset's cost less accumulated depreciation as the book value (or net book value) of the asset. Therefore book value is the cost not yet allocated to an expense. In the previous instance the book value of the equipment after the first month is
Cost USD 40000
Less: Accumulated depreciation 750
Book value (or cost not yet allocated to as an expense) 39250