Accelerated depreciation
Accelerated depreciation is a system of depreciation which reduces the value of assets at a high rate in the early years to encourage companies to invest in new equipment, because of the tax advantages. This applied in the UK until 1984: companies could depreciate new equipment at 100% in the first year. The system still applies in the USA where a 5-year tax depreciation can be applied (instead of the usual 20-years) to certain types of equipment.
Accelerated depreciation means any depreciation method that produces larger deductions for depreciation in the early
years of a asset's life. Accelerated cost recovery system (ACRS), which is a depreciation
schedule allowed for tax purposes, is one such example.
Category: Economics
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