accelerated depreciation


Accelerated depreciation

Any depreciation method that produces larger deductions for depreciation in the early years of an asset's life. Accelerated cost recovery system (ACRS), which is a depreciation schedule allowed for tax purposes, is one such example.

Accelerated Depreciation

Any of several systems of increasing the depreciation on an asset. Increasing the depreciation allows the asset's owner to write off more of the value of the asset, at least for some of the years of ownership. This can reduce the owner's tax liability. A common method of accelerated depreciation is the Modified Accelerated Cost Recovery System, which estimates depreciation in a way that bears only a rough relationship to an asset's actual life; it was designed to decrease the taxation in the early years of an asset's ownership.

accelerated depreciation

An Accelerated Cost Recovery System method for writing off the cost of a capital asset by taking the largest deductions in the early years of the asset's life. The purpose of using accelerated depreciation is to delay the payment of taxes so that cash savings from the deferral can be reinvested to earn additional income. Compare straight-line depreciation.

accelerated depreciation

a DEPRECIATION method which charges a higher proportion of the HISTORIC COST of an ASSET against profits during the early years of its life than is charged in the later years of its life, for example the reducing balance method of depreciation. It is often argued that an accelerated depreciation method is more appropriate since it levies higher depreciation charges in the early years of an asset's life when maintenance and repair charges are modest, while charging less for depreciation in the later years of the asset's life when maintenance and repair charges are higher.

accelerated depreciation

Depreciation methods that allow larger deductions in early years,trailing off to smaller deductions in later years. It is the opposite of straight-line depreciation, in which equal amounts are depreciated every year.Accelerated depreciation is not allowed for real property, but may be employed for certain components,such as fencing,security systems,carpet,or windows. The most common types of accelerated depreciation encountered in real estate are double declining balance, also called 200 percent declining balance, and the alternative 150 percent declining balance method.

Example: Carpeting in residential rental properties may be depreciated over 5 years.

Assuming $10,000 worth of carpeting is installed in an apartment building, this is each year's depreciation using the different methods:

Accelerated Depreciation

Various methods of depreciation that yield larger deductions in the earlier years of the life of an asset than does the straight-line method. The double (or 200 percent) declining balance method is an example of an accelerated depreciation method.