Accelerated Depreciation

Definition of 'Accelerated Depreciation'

The right to write off capital goods for tax purposes more quickly than the rate at which they would normally depreciate. This is intended to encourage investment, as it allows the company to defer payment of capital gains tax.

With accelerated depreciation, a companys profits net of depreciation, and this its tax liabilities, are lower than they would be under normal depreciation. Once the capital goods have been written off, the companys profits net depreciation rise to a level higher than they would have been under normal depreciation and tax bills rise.

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