This is a totally useless account from financial analysis
perspective. Accumulated depreciation is the total amount of depreciation for a
fixed asset that has been charged (using the chosen depreciation schedule) to expense since that asset was acquired and
made available for use.
It is used to determine a book value of the corresponding asset, to which depreciation is a contra account. A contra account in this
case is an asset account with a credit balance;
this means that it appears on the balance sheet as a reduction from the gross
amount of fixed assets reported.
Why is it useless? Because a book value of asset is useless.
To make an informed decision about what to do with the asset in question, we
need to build a financial model for this asset. And to build such a model, we
need the current market value for the
asset. Which usually has absolutely
nothing to do with its book value.
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