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Accumulated depreciation represents a contra-asset that reduces the net book value of property, plant, and equipment....

Accumulated depreciation represents a contra-asset that reduces the net book value of property, plant, and equipment.

True or False?

Business   Accounting   
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Answer #1

TRUE

Reason: Accumulated depreciation is the account which contain sum total of depreciation charged on fixed asset upto date. When depreciation is charged in an asset, depreciation expense is debited and on the other hand accumulated depreciation account is credited instead of asset account. When we need to calculate or report net book value of asset we simply deduct accumulated depreciation balance from the original cost of the asset. Hence this is called the contra asset account.

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