When Not to Use Accelerated Depreciation

Some businesses avoid accelerated depreciation because it necessitates more depreciation calculations and record keeping (though fixed asset software can readily overcome this issue). It may also be disregarded by businesses if they are not constantly generating taxable income, eliminating its main benefit. Because adopting accelerated depreciation has a minor tax impact, businesses with a modest amount of fixed assets may choose to disregard it. Finally, accelerated depreciation is typically avoided by publicly traded corporations because it lowers their reported income. Investors often buy down the price of a company’s stock when they observe a lower reported income figure.

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