Simple English definitions for legal terms
Read a random definition: asset-depreciation range
Accelerated Cost Recovery System: A way of calculating how much an asset (like a machine or a building) is worth over time. It lets people recover the cost of the asset faster by saying it will be useful for a shorter amount of time than before. This system was used for assets put into service from 1981 to 1986 and was replaced by a newer system in 1986.
The Accelerated Cost Recovery System (ACRS) is an accounting method used to calculate asset depreciation. It allows for the faster recovery of costs by assigning the asset a shorter useful life than was previously permitted under the Internal Revenue Code.
For example, if a company purchases a machine for $10,000 and the useful life of the machine is 10 years, traditional depreciation would allow for a deduction of $1,000 per year. However, under ACRS, the company may be able to deduct a larger amount in the earlier years of the machine's life, resulting in a faster recovery of costs.
ACRS applies to property put into service from 1981 to 1986 and was replaced in 1986 by the Modified Accelerated Cost Recovery System (MACRS).