Accelerated depreciation

Updated: Aug 20, 2021

Accelerated depreciation is any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. While the straight-line depreciation method spreads the cost evenly over the life of an asset, an accelerated depreciation method allows the deduction of higher expenses in the first years after purchase and lower expenses as the depreciated item ages.

Accelerated depreciation methods are sometimes mostly logistical. Although an asset is not required to be depreciated in the same manner in which it is used, an accelerated depreciation method tends to make this occur. This is because an asset is most heavily used when it is new, functional and most efficient. Because this tends to occur at the beginning of the asset’s life, the rationale behind an accelerated method of depreciation is that it appropriately matches how the underlying asset is used. As an asset ages, it is not used as heavily, since it is slowly phased out for newer assets.

Reference: Investopedia

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.