what is gaap depreciation
GAAP affects accounting practices in several ways. One example is depreciation. According to the Tax Foundation, GAAP allows for straight-line and accelerated depreciation, but it requires that the depreciation rate and expected wear and tear of the asset be consistent. Depreciation is the periodic transfer of a fixed assetâs cost to an expense account over its expected useful life.
Depreciation methods allowed under U.S. GAAP include straight-line, units of production, or accelerated methods (sum of digits or declining balance). Component depreciation is allowed but not commonly used. On the other hand, IFRS allows straight-line, units of production, and both accelerated methods.