DEFINITION of 'Group Depreciation'

A method of calculating depreciation by amalgamating assets into a pool, or group, which is used for a depreciation cost base. The assets grouped together should be similar in the way they function, or each asset should be small enough that it is not considered material on its own, which will make group depreciation more relevant for financial accounting purposes.

BREAKING DOWN 'Group Depreciation'

When pooling assets that are similar in nature, such as all of a company's delivery trucks that travel about the same distance every year, a company can simplify its depreciation calculation. However, before deciding to pool assets into one group, it is important to consider how each asset will be depreciated individually, and if it makes sense to group this asset with any others.

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