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ContraAsset - About Contra Asset Accounts Contra asset...

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About Contra Asset Accounts Contra asset accounts are accounts used to adjust the amounts associated with specific asset accounts. The first contra asset account is the accumulated depreciation account. It is associated with an asset account and is used to ‘adjust’ that account. Increases in contra asset accounts means larger ‘adjustments’ to the assets. When a long-term asset, such as a building, is acquired for cash the building asset account is debited and the cash account is credited. As the building ages depreciation expense is reported in the income statement. The entry is a debit to depreciation expense and a credit to accumulated depreciation. Now the company can report both the gross value (original cost) of the building and the net value (original cost less accumulated depreciation) of the building. The mechanics of a contra asset account are identical to the mechanics of a liability account. Debits (on the left) reduce the value of the accumulated
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