Final answer:
The credit balance in the Accumulated Depreciation account reflects the total amount of depreciation that has been allocated to assets over their useful lives.
Step-by-step explanation:
The credit balance in the Accumulated Depreciation account represents option 3) the amount of depreciation taken in past years. Accumulated Depreciation is a contra-asset account that is used to track the total amount of depreciation that has been recorded for an asset over its useful life. It is a credit balance because it offsets the regular depreciation expense which is a debit to the Depreciation Expense account. As depreciation is recorded each year, the Accumulated Depreciation account increases, representing the cumulative amount of depreciation taken in past years.
The credit balance in the Accumulated Depreciation account represents the amount of depreciation taken in past years on a company's fixed assets. Accumulated Depreciation is a contra asset account used to record the depreciation expenses that have been allocated to fixed assets over their useful lives. Each year, depreciation is charged against the assets to reflect their usage and wear and tear. The cumulative amount of this depreciation is then recorded in the Accumulated Depreciation account. This balance grows over time as more depreciation is recorded, indicating the total value of the wear and tear the assets have undergone since they were acquired.