Prepared by: Joydeep Chowdhury
Former Lecturer of Dept of Computer Application (B.B. College, Asansol)
Accelerated cost recovery system
1. How Accelerated cost recovery system is introduced:
Paying taxes is becoming a routine job for the people of almost all the nation. The
employee of government and the private firms, businessmen and the people related to
other occupation use to converse with the issue-“How to reduce the rate of amount pay
for the tax”.
People are becoming. They are buying the things which are imported or some precious
things such as fancy cars, jewelries etc. For these, they also have to pay taxes. The
product we buy, every year by year lost its value in amount of cash (we used to call it
Buy value). This losing of value is called Depreciation. In the, word of finance,
Depreciation is: “A non-cash expense that provides a source of free cash flow. Amount
allocated during the period to amortize the cost of acquiring Long term assets over the
useful life of the assets” Depreciation tax shield is used to for the value of the tax write-
off on depreciation of plant and equipment.
Sometimes, we can assume that the depreciation of any asset is smooth or in financial
term it is linear. When we purchase any asset we consider a depreciation rate (sometimes
following some schedule that is market value, demand, supply and obviously response of
people, usages and some future aspects of that asset. NB:1 illustrate it). Some time we
simply consider some value by our own. But, it is not a good practice. Some time in
certain period of time the asset can go through a vast depreciation or less depreciation of
its value what we have expected. But, in the above two approaches this vast change in
depreciation remain under curtain.
Every year, the products we buy lose their value. This losing of value is called
Depreciation. To recover these loses, there needs to be an Accelerated cost recovery
system – this produces larger deductions