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.