Asset Depreciation Range - ADR

Brace yourself: this is an accounting method, and it was created by the IRS (big fun!) in 1971. Now, since 1986, it's known as modified accelerated cost recovery system (MACRS). This method offers upper and lower limits of the "useful life" of items a business uses, divided by asset classes.

Things break down, and are worth less the older they get (except in cases like classic cars, but you normally won't use those for business...unless you drive Uber in your Model-T). The accounting method offers a way for a business to know how much to depreciate (that is, the amount to lower the asset's value on the company books) each item.

Say the method indicates an item has an useful life of 10 years...the ADR/MACRS method allows for 20% over and above the estimate, so the business can depreciate the item for 8 to 12 years.