Half-Year Convention For Depreciation

AAA

DEFINITION of 'Half-Year Convention For Depreciation'

A depreciation schedule that treats all property acquired during the year as being acquired exactly in the middle of the year. This means that only half of the full-year depreciation is allowed in the first year, with the remaining balance being deducted in the final year of the depreciation schedule, or the year that the property is sold.

INVESTOPEDIA EXPLAINS 'Half-Year Convention For Depreciation'

The half-year convention for depreciation applies to both modified accelerated cost recovery systems and straight-line depreciation schedules. There is also a mid-quarter convention that is used instead of the half-year convention if the aggregate depreciable base of new property was greater than 40% and was used in service sometime during the last three months of the year.

RELATED TERMS
  1. Modified Accelerated Cost Recovery ...

    The new accelerated cost recovery system, created after the release ...
  2. Depreciation

    1. A method of allocating the cost of a tangible asset over its ...
  3. Straight Line Basis

    A method of computing amortization (depreciation) by dividing ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax ...
  5. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...
Related Articles
  1. An Introduction To Depreciation
    Active Trading

    An Introduction To Depreciation

  2. Understanding Pro-Forma Earnings
    Fundamental Analysis

    Understanding Pro-Forma Earnings

  3. Understanding The Income Statement
    Forex Education

    Understanding The Income Statement

  4. Free Cash Flow: Free, But Not Always ...
    Markets

    Free Cash Flow: Free, But Not Always ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center