Investor's wiki

Accelerated Cost Recovery System (ACRS)

Accelerated Cost Recovery System (ACRS)

What is an accelerated cost recovery system?

An accelerated cost recovery system, generally named ACRS, is a form of quickly devaluing a property, taking into consideration deducting more from the property proprietor's taxes. In this case, ACRS property is partitioned into different classes, with each getting a foreordained time span over which it would devalue. This rule generally applies for property set in service among 1980 and December 1986.

More profound definition

ACRS is a depreciation system that began following the Economic Recovery Tax Act of 1981. ACRS depreciation relies upon recovery periods as foreordained by the IRS as opposed to valuable life.
Notwithstanding, for property set into service after 1986, ACRS was supplanted by the modified accelerated cost recovery system (MACRS).
Under MACRS, just the straight-line method and declining balance method of computing applies. Taxpayers utilizing the declining balance method would change to the straight-line method in a situation where depreciation deductions are optimized.
An accelerated cost recovery system is intended to increase the reported depreciation amounts of a company, in this manner furnishing it with a higher tax return. This tax deduction would assist the company with keeping a greater amount of the revenue generated by these assets. This means that a company can repay any associated debt all the more effectively and rapidly while expanding the primary concern simultaneously.

Accelerated cost recovery system model

An accelerated cost recovery system applies to companies expecting to benefit from more revenue generated by their assets.
For example, assume a company purchases an asset at $10 million. In light of straight-line depreciation, this asset will deteriorate toward the finish of a 20-year period, which technically means a depreciation rate of $500,000 each year. Assuming that this equivalent asset qualified for depreciation under ACRS north of 10 years, the rate of depreciation would consistently increase to $1 million every year.


  • The consequence of ACRS was that it increased the annual depreciation amount of an asset, considering higher tax deductions, leaving companies with a greater amount of their revenue in their pockets.
  • The accelerated cost recovery system (ACRS) was put out of purpose and supplanted by the modified accelerated cost recovery system (MACRS) in 1986.
  • ACRS was put into effect in 1981 as part of the Economic Recovery Tax Act of 1981 fully intent on expanding the cash flows of companies during the recession.
  • The accelerated cost recovery system (ACRS) is a depreciation method for assets determined to give tax breaks.
  • Under ACRS, assets were assigned to one of eight recovery periods, going from three to 19 years, contingent upon the helpful life of the asset.