What does Accumulated Depreciation tell us?
Accumulated Depreciation reports the amount of depreciation that has been taken from the time an asset was acquired until the date of the balance sheet. The cost of an asset minus its accumulated depreciation is the asset’s carry value or book value.
Since depreciation is an allocation of an asset’s cost based on the estimated useful life, you should not assume that the depreciation is an indicator of what’s occurring to the asset’s market value. For example, a building in an excellent location may be increasing in value even though depreciation is taken. The present market value might be three times the original cost and yet the accumulated depreciation is now equal to the asset’s cost—meaning its book value is $0.
The amount reported in Accumulated Depreciation merely reports the total amount of an asset’s cost that has been sent over to the income statement as Depreciation Expense since the asset was acquired.
Learn more about Depreciation.
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its just the cost of an asset -acc depreciation
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I still dont know, why we have to show this is makes no sense.. Like does it mean that you know broke even with the purchase of your asset???
very well explained, it has cleared my all concept
how do i present this in my SOFP?? = balance sheet?? .. Do i need to show workings on how i get the net book value?? or can i just show the net book value?..