What does accumulated depreciation represent?

What does accumulated depreciation represent?

• A. The current year's depreciation expense
• B. The asset's market value
• C. The total depreciation charged to date
• D. Future depreciation estimates

Answer: (C)

Accumulated depreciation is a cumulative, contra-asset account that shows how much of an asset’s cost has been expensed to date. Each period, depreciation expense is recorded and added to this account, so it grows over time. It represents the total depreciation charged since the asset was placed in service, not just the current year’s expense. The asset’s book value on the balance sheet is the original cost minus this accumulated amount, not the asset’s current market value or any future estimate of depreciation. For example, if an asset cost 50,000 and has 35,000 of depreciation accumulated to date, its net book value is 15,000.

Accumulated depreciation is a cumulative, contra-asset account that shows how much of an asset’s cost has been expensed to date. Each period, depreciation expense is recorded and added to this account, so it grows over time. It represents the total depreciation charged since the asset was placed in service, not just the current year’s expense. The asset’s book value on the balance sheet is the original cost minus this accumulated amount, not the asset’s current market value or any future estimate of depreciation. For example, if an asset cost 50,000 and has 35,000 of depreciation accumulated to date, its net book value is 15,000.