Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 11 - Depreciation, Impairments, and Depletion - Review and Practice - Questions - Page 582: 4

Answer

If an asset has an unusually long life, it means that its monthly/periodically depreciation charge will be very low. Assets are maintained at book value, which is the cost less the depreciated amount. The asset will be maintained at a higher value.

Work Step by Step

This may be a way of reducing periodic expenses to overstate profitability.
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