Course Outline
Join PRO

What is accelerated depreciation?

Author:
Harold Averkamp, CPA, MBA

Definition of Accelerated Depreciation

Accelerated depreciation is the allocation of a plant asset‘s cost at a faster rate than straight-line depreciation.

Compared to straight-line depreciation, accelerated depreciation will mean:

  • More depreciation in the earlier years of an asset’s life
  • Less depreciation in the later years of the asset’s life
  • Since the total amount of depreciation over the asset’s life will be the same regardless of the depreciation method used, the difference involves the timing of when the depreciation is reported.

    Examples of Accelerated Depreciation Methods

    Three examples of accelerated depreciation methods include the following:

    Use of Accelerated Depreciation for Income Tax Reporting

    The U.S. income tax regulations allow a business to use accelerated depreciation on its income tax return while using straight-line depreciation on its financial statements. For profitable corporations, this likely results in deferred income tax payments.

    Join PRO to Track Progress

    Advance Your Accounting and Bookkeeping Career

    Must Watch image

    • Perform better at your job
    • Get hired for a new position
    • Understand your small business
    • Pass your accounting class
    Watch the Video
    Certificates of Achievement

    Earn Our Certificates of Achievement

    Certificates of Achievement
    • Debits and Credits
    • Adjusting Entries
    • Financial Statements
    • Balance Sheet
    • Income Statement
    • Cash Flow Statement
    • Working Capital and Liquidity
    • Financial Ratios
    • Bank Reconciliation
    • Accounts Receivable and Bad Debts Expense
    • Inventory and Cost of Goods Sold
    • Depreciation
    • Payroll Accounting
    View PRO Plus Features

    Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials

    Read all 2,866 reviews

    Features

    PRO

    PRO Plus

    Features
    Lifetime Access (One-Time Fee)
    Explanations
    Quizzes
    Q&A
    Word Scrambles
    Crosswords
    Bookkeeping Video Training
    Financial Statements Video Training
    Flashcards
    Visual Tutorials
    Quick Tests
    Quick Tests with Coaching
    Cheat Sheets
    Bookkeeping Study Guide
    Managerial Study Guide
    Business Forms
    All PDF Files
    Progress Tracking
    Earn Badges and Points
    Certificate - Debits and Credits
    Certificate - Adjusting Entries
    Certificate - Financial Statements
    Certificate - Balance Sheet
    Certificate - Income Statement
    Certificate - Cash Flow Statement
    Certificate - Working Capital
    Certificate - Financial Ratios
    Certificate - Bank Reconciliation
    Certificate - Accounts Receivable and Bad Debts Expense
    Certificate - Inventory and Cost of Goods Sold
    Certificate - Depreciation
    Certificate - Payroll Accounting
    Motivational Badges
    Motivational Points
    Medal Rankings
    Activity Streaks
    Custom Public Profile Page of Achievements

    About the Author

    Harold Averkamp

    For the past 52 years, Harold Averkamp (CPA, MBA) has
    worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

    Learn More About Harold

    Read 2,866 Testimonials

    Take the Tour Join Pro Upgrade to Pro Plus