Explain the balance in an Accumulated Depreciation Machinery account and what it represents.?

Question

Explain the balance in an Accumulated Depreciation Machinery account and what it represents. Are they funds to replace the machinery when it wears out? If not, what does it represent?

Answer 1

Each year, capital equipment depreciates according to a schedule. The amount is debited to the Equipment account and credited to the Accum. Depr. Mach. account. It does not represent any actual transfer of money. It is a "paper loss."

Answer 2

Depreciation On Machinery