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Depreciation is the decline in an asset’s value because of use, wear and tear, or obsolescence. Accumulated depreciation is the total depreciation currently recorded on an asset. It is the cumulative depreciation of an asset up to a single point in its life. The depreciation of an asset during a single period is added to the previous period’s accumulated depreciation to get the current accumulated depreciation, no matter what method is used to calculate the value of the asset.
Accumulated depreciation represents the loss of value that has been recorded on an asset since the asset was acquired. Therefore, an asset’s carrying value on the balance sheet is the difference between its purchase price and accumulated depreciation.