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 583: 10

Answer

First, the base to be used in the computation of depreciation should be determined. The base depends on the disposal value and the initial cost of an asset. Second, the service life of the asset should be approximated. The service life is influenced by economic and physical issues that warrant their retirement. Finally, the ideal methodology for apportioning the depreciation cost should be selected. The method should uphold rationality and systematicness.

Work Step by Step

First, the base to be used in the computation of depreciation should be determined. The base depends on the disposal value and the initial cost of an asset. Second, the service life of the asset should be approximated. The service life is influenced by economic and physical issues that warrant their retirement. Finally, the ideal methodology for apportioning the depreciation cost should be selected. The method should uphold rationality and systematicness.
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