accumulated depreciation an asset & liability

Accumulated depreciation is not classified as either an asset or liability, but rather as a contra asset account on the balance sheet. It represents the total amount of depreciation expense that has been recorded against a fixed asset since it was acquired. While assets reflect the resources a company owns, accumulated depreciation reduces the book value of those assets over time as they are used or wear out. By tracking depreciation, businesses can allocate the cost of an asset over its useful life, ensuring an accurate representation of its remaining value. Although accumulated depreciation lowers the value of the asset, it does not create a liability for the company, but rather a reduction in the asset’s value on the balance sheet