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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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What objective should guide the selection of a depreciation method for financial reporting purposes?

To determine

Depreciation:

The depreciation is the expense which is debited to the income statement in the ratio of the period of the respective asset. It is an estimate only as it is computed on the basis of estimated life and the scrap value estimated by the company using that asset.

The factors for selection of depreciation method for financial reporting.

Explanation

The depreciation is the expense which is charged on the asset having long life for use i.e. operating assets against the income and computed on the basis of its estimate life and scrap value after use.

The factors that help in guiding to make the selection of the method of the depreciation method are the trends of income generated from the respective asset against which the expense of depreciation is to be charged...

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