The Type of Account And Normal Balance of Accumulated Depreciation Is What?

 

Accumulated Depreciation is a Contra Asset Account and normal or usual or favourable or positive balance is credit while negative or unfavourable balance is debit.

Actually, accumulated depreciation is deducted from relevant fixed assets on balance sheet in order to calculate the book value or written down value of fixed assets.

For example, accumulated depreciation and depreciation for the year on building is Rs. 50000 during the first accounting period. Depreciation for the year is an estimated expense which is recorded in Income Statement or Profit and Loss Account while Accumulated depreciation is deducted from the original cost of building in order to calculate the book value or written down value of building which is here as Rs. 450000 (500000 - 50000) where as original cost of building is Rs. 500000.

The adjusting entry to record the depreciation of a building for the fiscal period is shown below:

                 Depreciation on Building Expense a/c  50000

  

                                                                              Accumulated Depreciation - Building a/c  50000

 

                                                             (Depreciation for the Period is Charged)