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underdepreciation investment & finance definition
- Depreciation that is insufficient to allow for the eventual replacement of the asset being depreciated. Underdepreciation is generally caused by rising prices on replacement assets. Compare overdepreciation 1.
- Depreciation that causes an asset to be carried on a firm's books at a greater value than it would have if it were sold. Underdepreciation results in overstated earnings and assets on the firm's financial statements. Compare overdepreciation 2.
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