What Is an Ordinary Accelerated Depreciation Schedule?

What Is an Ordinary Accelerated Depreciation Schedule? thumbnail
MACRS is the accepted accelerated depreciation standard in the United States.

Accelerated depreciation is an accounting method that enables an asset to be depreciated more during the earlier years of its lifetime. The Modified Accelerated Cost Recovery System (MACRS) is the current standard for United States tax reporting.

  1. History

    • The Tax Reform act of 1986 instituted the MACRS as the new accelerated depreciation standard in the United States. This replaced the Accelerated Cost Recovery System that had been in place since 1981.

    Implementation

    • An asset belongs to a specific asset class, which corresponds to a certain class life. This class life determines how much of the asset value can be deducted for tax reporting purposes during each reporting period (see Resources for the IRS publication regarding property depreciation for the 2009 tax year).

    Benefits

    • Companies want to depreciate their assets as fast as possible to obtain the best possible tax deductions. More tax deductions result in less paid taxes, and more money to the company's bottom line. According to the time value of money law, this additional money has greater value today than if it is realized in the future.

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