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.
References in periodicals archive ?
An accounting-method change from an improper method of depreciation that resulted in under- or over-depreciation of an asset can be made under the automatic-consent provisions of Rev.
We are not arguing that two mistakes equal the right answer, but the solution for over-depreciation of machinery and equipment doesn't require going to fair value accounting.