Explore commonly used personal finance terms.
Accelerated depreciation is an accounting method where assets lose value at a faster rate early in their useful life, allowing businesses to reduce taxable income by claiming higher depreciation expenses sooner. Common accelerated methods include the double-declining balance method and sum-of-the-years-digits. This approach benefits businesses by providing tax savings earlier, freeing up cash for reinvestment. However, it reduces the depreciation deduction available in later years, impacting future taxes.
