IBM, the large computer equipment and services company, stated in one of its annual reports that “Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method.” What estimates are necessary to carry out this policy? What factors should be considered in making each of the estimates?
IBM, the large computer equipment and services company, stated in one of its annual reports that “Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method.” What estimates are necessary to carry out this policy? What factors should be considered in making each of the estimates?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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IBM, the large computer equipment and services company, stated in one of its annual reports that “Property, plant and equipment are carried at cost and depreciated over their estimated useful lives using the straight-line method.” What estimates are necessary to carry out this policy? What factors should be considered in making each of the estimates?
Expert Solution
Straight line method
Straight line method of depreciation is the method of depreciation where depreciation is charged on purchase value of the fixed asset. Depreciation charged is same every year. Salvage value effects the depreciation of the asset.
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