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accrued depreciation

   Also found in: Acronyms, Encyclopedia 0.01 sec.
Accumulated Depreciation
The total depreciation on an asset, and not simply the depreciation that is added each year. One may calculate the accumulated depreciation by subtracting the original value of the asset from its current book value or by multiplying the yearly depreciation by the number of years the asset has been held.

accrued depreciation

The total depreciation claimed, to date, on a property. It is an entry on the balance sheet and is supposed to properly reflect that the property is becoming less valuable with the passage of time.Realistically,in the case of real estate,the property is usually becoming more valuable each year.As a result,you may have a book value of $200,000 but a fair market value of $2,000,000.



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The approach is especially persuasive when land value is well supported and the improvements are new or suffer only minor accrued depreciation and, therefore, represent a use that approximates the highest and best use of the land as though vacant.
1) A new approach in accounting for accrued depreciation is long overdue and will further support the use of the cost approach in evaluating special-purpose properties, which typically have insufficient comparable sales and/or income and expense data.
Thomas Holderness, "A New Look at Accrued Depreciation," The Real Estate Appraiser and Analyst (Fall 1988): 12-14.
 
 
 
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