overdepreciation(redirected from Over-depreciates)
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.
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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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.