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what types of transactions increase and decrease contra asset accounts ?

what types of transactions increase and decrease contra asset accounts ?

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Expert Solution

Contra Asset accounts decreases the asset balances and few examples of Contra Asset accounts are Accumulated Depreciation which decreases the respective capital assets like plant, machinery, equipment etc. and another example is Allowance for Uncollectible Accounts or Allowance for Doubtful Accounts that decreases the balance of Accounts Receivable.

The transactions that increase or decrease the contra assets are like charging depreciation expense that increases the contra asset of Accumulated Depreciation because the depreciation is charged on the capital assets for wear and tear and that depreciation is accumulated for every year or a specific period, thus increases the balance of contra asset of Accumulated Depreciation periodically and reinstatement of accounts receivable where the contra asset of Allowance for Uncollectible accounts decreases because accounts which were written off as uncollectible are now expected to collect or just collected so the allowance for uncollectible accounts is decreases due to reinstatement of accounts.

These are the possible transactions which increase and decrease the contra asset accounts.

ekkarill92 answered 1 year ago
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