Definition of Ace Depreciation

by Osmond Vitez - Updated September 26, 2017

Depreciation is the expense of a long-term asset posted each month into the general ledger by a company. Adjusted current earnings (ACE) depreciation is a technical calculation beginning around 1990 for certain transactions.

Facts

The Tax Reform Act of 1986 introduced companies to the alternative minimum tax. This ensures a company with copious amounts of income does not avoid its tax liability. ACE depreciation is a technical recalculation to adjust earnings for calculating the alternative minimum taxable income.

Features

Depreciation for tax purposes follows the modified accelerated cost recovery system (MACRS). This advances the depreciation benefits for assets when paying taxes.

Video of the Day

Brought to you by Techwalla
Brought to you by Techwalla

Considerations

Companies with ACE depreciation adjustments for the alternative minimum tax can use the alternative depreciation system allowed by tax law. This typically mirrors asset class life better and can help companies estimate ACE depreciation adjustments.

Photo Credits

  • Hemera Technologies/AbleStock.com/Getty Images
Cite this Article A tool to create a citation to reference this article Cite this Article