It stands for accelerated cost recovery system; a system of asset depreciation, for tax purposes, that determines the rate of appreciation for an entity’s assets. It involves depreciating an asset (physical in nature) on a rapidly increasing rate, allowing for a higher proportion from the entity’s taxes. Under this system, an entity’s assets are grouped in various classes, with each being assigned a specific time period over which it would be set to depreciate, rather than over a period defined by their useful lives.

For example, it may entail the deployment of a 150% or 200% declining balance system, taking into consideration the expected useful life assigned to each and every asset class.

This system was introduced following the Economic Recovery Tax Act of 1981 (in the USA). However, and for assets placed into service after 1986, this system was replaced by another one known as the modified accelerated cost recovery system (MACRS).

This system is also known as accelerated depreciation.