Chapter 11, Problem 2CA

To determine

Depreciation: Depreciation can be defined as reduction in the value of asset due to its wear and tear.

(a)

To describe: To describe the depreciation methods based on treating assets as-

(1) Unit method.

(2) Composite life method.

To determine

(b)

To present: To present the arguments for and against the use of each of the two methods (unit method and composite life method).

To determine

(c)

To describe: To describe how retirements are recorded under Unit cost and Composite life method.