Technical definition
A contra-asset that accumulates depreciation recognized since an asset was acquired.
How it works
The account has a normal credit balance and is presented as a deduction from the related asset's gross cost. Keeping cost and accumulated depreciation separate preserves useful information about age and investment.
Everyday example
Equipment cost 30,000 less accumulated depreciation 12,000 equals carrying amount 18,000.
Common pitfall
It is not cash saved for replacement and is not itself a liability.