accelerated depreciation

Primary tabs

Accelerated depreciation is any method of depreciation where the business depreciates a greater proportion of an asset’s value earlier in its life. A common accelerated depreciation method is MACRS. Compare with straight-line depreciation method, where the asset’s value is depreciated proportionally throughout its useful life. 

Accelerated depreciation is generally desirable for companies because, according to the principle of the time-value of money, the earlier money is received, the more valuable it is. Since accelerated depreciation allows the business to take greater depreciation deductions sooner, the depreciation is worth more when considering the time value of money. 

[Last updated in November of 2021 by the Wex Definitions Team]