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Contra Account

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Contra Account
An account whose value offsets the value of an equivalent account. This applies whether the account is debited or credited. For example, two firms may have contra accounts in which each owes the other money. They might agree to offset the mutual debt and make a single payment to whichever is owed more. Perhaps the most common example of a contra account is an asset's depreciation, which is subtracted from its original price to calculate its book value. In this case, the depreciation and the original price are contra accounts with respect to each other.
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The effect, however, is reported as a contra account in the owners' equity section of the balance sheet and there is no effect on income.
Environmental contamination: disclosing liabilities & asset ... by Newell, Gale E.; Kreuze, Jerry G.; Newell, Stephen J. / The National Public Accountant
Accumulated depreciation," a contra account, is not netted against its related primary account, "furniture and fixtures.
When do the provisions of SSARS no. 1 apply? by Guy, Dan M. / Journal of Accountancy
Treasury stock is recorded as a contra account in the equity section of the balance sheet.
Accounting for changes in shareholder equity by Schwartz, Marlyn A. / The National Public Accountant
 
 
 
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