Accumulated depreciation is a contra asset account, meaning its natural balance is a credit that reduces its overall asset value. Accumulated depreciation on any given asset is its cumulative depreciation up to a single point in its life.


As stated earlier, carrying value is the net of the asset account and the accumulated depreciation. The salvage value is the carrying value that remains on the balance sheet after which all depreciation is accounted for until the asset is disposed of or sold.


It is based on what a company expects to receive in exchange for the asset at the end of its useful life. An asset’s estimated salvage value is an important component in the calculation of depreciation.

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