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What is Accelerated Depreciation?

In accounting, Accelerated Depreciation is used to allocate the cost of a tangible asset over its useful life. Unlike straight-line depreciation, where the cost is spread evenly over each period, accelerated depreciation allows for a higher depreciation expense in the earlier years of an asset’s life and a lower expense in the later years.

Importance in Accounting:

Advantages of Accelerated Depreciation Method:

Disadvantages of Accelerated Depreciation Method:

Example of a Wholesaler or Retailer Business:

Let’s consider a retailer that purchases a delivery truck for $50,000 with an expected useful life of 5 years. Using the double declining balance method, the annual depreciation will be:

In this example, you can see that the depreciation expense is higher in the earlier years, reflecting the accelerated nature of the method.

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