Define: Accelerated Depreciation

UK Accounting Glossary

Definition: Accelerated Depreciation

Quick Summary

Method that records greater depreciation than straight-line depreciation in the early years and less depreciation than straight-line in the later years of an asset’s holding period.

What is the dictionary definition of Accelerated Depreciation?

Dictionary Definition

A rate of depreciation of assets that is faster than the useful-life basis normally used to calculate depreciation.

For example: a laptop may be expected to have a useful life of four years when it’s first purchased; however, as a result of new innovations in laptop products, it’s instead replaced after two years.

If the useful life basis had been used, the full cost would not have been charged to the accounts until the end of the fourth year; by accelerating the depreciation the full charge would be made earlier, thus reflecting the short life cycle of high-tech products.

In the US, accelerated depreciation is sometimes used to gain tax advantages.

Full Definition

Accelerated depreciation is a depreciation method whereby an asset loses book value at a faster rate than the traditional straight-line method.

Generally, this method allows greater deductions in the earlier years of an asset and is used to minimise taxable income.