Choosing an Appropriate Depreciation Method When it comes to his new silk-screening machine, Liam is having trouble deciding which deprecation technique he should use. During the following five years, he anticipates a rise in sales volume. He also anticipates (hopes) that he will need to purchase a second silk-screening machine in two years in order to keep up with the demand for the items produced by his expanding firm. In Liam's case, which depreciation technique makes more sense: increasing spending in the first few years or maintaining expenses at the same level over time? Or would it be preferable if he did not think in terms of time but rather in terms of how he would use the machine?

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 5C: The following two statements concern depreciation: 1. Because our plant was shut down for part of...
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Choosing an Appropriate Depreciation Method

When it comes to his new silk-screening machine, Liam is having trouble deciding which deprecation technique he should use. During the following five years, he anticipates a rise in sales volume. He also anticipates (hopes) that he will need to purchase a second silk-screening machine in two years in order to keep up with the demand for the items produced by his expanding firm. In Liam's case, which depreciation technique makes more sense: increasing spending in the first few years or maintaining expenses at the same level over time? Or would it be preferable if he did not think in terms of time but rather in terms of how he would use the machine?

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