accelerated depreciation

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A rate of depreciation of assets that is faster than the useful-life basis normally used to calculate depreciation. For example, a computer may be expected to have a useful life of four years when it is purchased; however, as a result of new product innovation, it is 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, reflecting the short life cycle of high-tech products. In the USA, the accelerated depreciation may be used to gain tax advantages (see accelerated cost recovery system).

Subjects: Accounting.

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