Accelerated Depreciation

Accelerated depreciation is customarily found with tax depreciation, it allows the small business owner the opportunity to take additional (accelerated) depreciation expense and reduce their respective tax obligation for that tax year.

Bookkeeping – Introduction to Depreciation (Lesson 50)


Depreciation is the process of allocating the initial capital outlay for fixed asset purchases over time to the income statement.  The basic principle is that any fixed asset has a predetermined lifetime based on time, usage or fair market value.  Your job as the bookkeeper is to assign depreciation expense to the respective asset and record the entry as a function of daily operations.

Various Sets of Accounting Books

Accounting Books

Accounting’s primary purpose is to measure economic activity.  There are several different methods to determine the economic value generated in your business each year.  In accounting this is referred to as sets of books.  There are four basic sets of accounting books.  Each has a different purpose and end goal.

Accelerated Depreciation – An Explanation

Accelerated Depreciation

When it comes to depreciation, no two businesses are alike. Unlike traditional straight line depreciation where the asset value is costed out to depreciation expense in equal increments over a given life expectancy, accelerated depreciation expenses the cost at higher values during the earlier accounting periods and at a lower amount towards the last half of the asset’s life expectancy.

The Definition of Fixed Assets

Any tangible item not consumed within one accounting cycle (typically a year) and providing long term utility is referred to as a Fixed Asset.  Traditional images include manufacturing equipment, tools, transportation vehicles, buildings and utility related systems (sewage systems, power grids, power plants and dams).  In accounting, these assets are recorded to the balance sheet as ‘Fixed Assets’. 

Follow by Email