Final answer:
The accumulated depreciation account is shown on the balance sheet as a contra-account, which reduces the historical cost of assets to show their net book value.
Step-by-step explanation:
The accumulated depreciation account is displayed on the balance sheet. This account is a contra-account, meaning it offsets the asset accounts to which it relates. It represents the total amount of depreciation expense that has been recorded over time for fixed assets. When fixed assets are presented on the balance sheet, they are shown at their historical cost. The accumulated depreciation is then subtracted from this cost to indicate the net book value of the assets.
For instance, if a company purchases a piece of equipment for $100,000 and the accumulated depreciation over time is $40,000, the equipment will be displayed on the balance sheet as a $100,000 asset with a corresponding $40,000 accumulated depreciation. This results in a net book value of $60,000. Accumulated depreciation is crucial because it gives stakeholders a clearer picture of the true value of a company's assets over time due to use and wear and tear.
The accumulated depreciation account, which is a contra-account, is shown on the balance sheet. The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It presents a company's assets, liabilities, and equity, including the accumulated depreciation account.
Accumulated depreciation is the total depreciation expense that has been charged against an asset since its acquisition. It represents the gradual reduction in the value of an asset over time due to wear and tear, obsolescence, or other factors. The accumulated depreciation account is subtracted from the asset's original cost on the balance sheet to determine the asset's carrying value or net book value.