Accumulated Depreciation

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Accumulated Depreciation

Accumulated depreciation is the total depreciation taken for all years combined.

Let’s say you have an asset worth $20,000 that will last five years. If you depreciated it evenly you would take $20,000, divide it by 5, and expense $4,000 each year. The first year the accumulated depreciation would be $4,000. The second year it would be $4,000 + $4,000, or $8,000. The third year the accumulated depreciation would be $4,000 + $4,000 + $4,000, or $12,000.

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