Accumulated Depreciation” is an accounting term that refers to the total accumulated decrease in value (or Depreciation) of an Asset over time as reflected on a company’s Balance Sheet. Although Depreciation is a “non-cash” expense, the IRS allows a company to account for Depreciation as an expense to reduce its Income Tax Liability.

Accumulated Depreciation also impacts the Book Value of a company’s Assets, because the cost of an Asset less its Accumulated Depreciation equals the Book Value of that Asset.