What is recoverable depreciation?

What is the difference between Depreciation and Accumulated Depreciation?

• I've been reading this accounting book and both these words seem similar. What's the difference?, how am I supposed to know if something is a Depreciation and not Accumulated Depreciation. Please someone explain in "simple English"

• Answer:

  Depreciation is what happens during one given period of time, for example a fiscal year. The rate depends on what kind of depreciation is used by the company, whether straight line, double declining, MACRS.... I.e. for straight line, the economic life of a car is 5 years and it cost $20k. Depreciation is (20k/5) or 4k per year Accumulated depreciation is the depreciation over different times over the lifetime of the piece of plant, property or equipment. Back to the above car example, at the end of year 3 I will have an accumulated depreciation of 12k Year 1 4000 Year 2 4000 Year 3 4000 Total = 12000 My car will carry a book value of 8000 at the end of Year 3 (20k original cost minus 12k accumulated depreciation) Once accumulated depreciation totals the historical cost of the equipment, (in this example 5 years) the equipment can be taken off the books as its value has been completely depreciated.