overdepreciation

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Overdepreciation

The act of depreciating an asset on a firm's balance sheet such that the asset is recorded as being worth less than it would be if it were sold. This results in the firm understating its earnings and/or the value of its assets.

overdepreciation

1. Depreciation that is more than sufficient to allow for the eventual replacement of the asset being depreciated. Compare underdepreciation.
2. Depreciation that causes an asset to be carried on a firm's books at a lesser value than it would be worth if it were sold. Overdepreciation produces understated earnings and assets on financial statements. Compare underdepreciation.