What Effect Does Contra Asset Accounts Have On A Balance Sheet

The effects of Contra Assets Account on balance sheet are that these are deducted from the ending balances of assets accounts in order to calculate Net Realizable Value of Assets. Actually, these are the reversal of relevant assets accounts on balance sheet.

Major examples of contra asset accounts include Allowance For Doubtful Accounts and Accumulated Depreciation.

Allowance for doubtful accounts is deducted from ending balance of Accounts Receivable to calculate Net Realizable Value or Book Value of Accounts Receivable.

Accumulated Depreciation is deducted from the depreciable cost of the Fixed Assets in order to calculate the book value of the fixed assets / non current assets.