IT System Auditor
33683 Points
Joined April 2010
Accumulated depreciation is the total amount of depreciation for a fixed asset that has been charged to expense since that asset was acquired and made available for use.
For Example:
A company buys an asset for ₹5,000 that has a five-year lifespan and zero salvage value. The company uses straight-line depreciation, and the asset depreciates at a rate of ₹1,000 per year.
In year one, depreciation will be ₹1,000, as will accumulated depreciation, and carrying value of the asset will be ₹4,000.
In year two, depreciation will be ₹1,000, accumulated depreciation will be ₹2,000 (₹1,000 from the current year + ₹1,000 accumulated from previous years) and carrying value will be ₹3,000.
Each subsequent year will follow the same process.