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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.

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    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

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