Glossary of Cost Segregation Analysis Terms

Accelerated Depreciation: A method of calculating depreciation in which a greater amount of depreciation expense is recorded in the earlier years of an asset's useful life than in later years.

Depreciation: The portion of the cost of a capital asset representing the expiration in the useful life of the capital asset attributable to wear and tear, deterioration, action of the physical elements, inadequacy, and obsolescence which is charged off during a particular period. In accounting for depreciation, the cost of a capital asset, less any salvage value, is spread over the estimated useful life of such an asset.

Depreciation Expense: The portion of an asset's cost allocated to the current accounting period.

Engineering Based: Means reviewed by one or more licensed engineers as part of the process.

Present Value: Present value states that an amount of money today is worth more than the same amount in the future because money can earn a return if invested. By deferring state and federal income taxes, the taxpayer is effectively receiving an interest free loan from the government.

Straight Line Depreciation: A method of calculating depreciation expense that allocates an asset's purchase cost evenly over the asset's expected useful life.

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