What is depreciation, and why do companies apply it to fixed assets? Discuss at least two methods of calculating depreciation and how they affect a company’s financial reporting over time. Need answer
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What is depreciation, and why do companies apply it to fixed assets? Discuss at least two methods of calculating depreciation and how they affect a company’s financial reporting over time. Need answer
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- How does the concept of depreciation affect the financial statements of a company, and what methods are commonly used to calculate depreciation?Why would companies choose one method of accounting for Depreciation over another method? What are the benefits of each depreciation type?What is depreciation, how is it calculated and how does it relate to the matching principle of accounting? Are there any estimates in depreciation and what are they? Why is it better to use these estimates than to not depreciate at all? What would be the alternatives to depreciation and what kinds of problems do they present? Please think about where we report equipment and similar items on the financial statements.
- Describe the different methods available for recording depreciation on plant assets. Recommend the approach that you feel would be most advantageous for your selected company and explain why. Discuss the process for reporting contingent liabilities in the financial statements. Provide two examples of contingent liabilities that you might expect to see on your selected company’s balance sheetHow does depreciation affect the financial statements?Discuss the factors that might influence a company’s choice of depreciation method as it relates to choosing ( 1) activity based methods versus time based methods (2) straight line depreciation versus other time-based methods (3) different methods for financial reporting and income tax purposes.
- Question: What is the purpose of depreciation in accounting? a. Increase asset value b. Allocate the cost of an asset over its useful life c. Reduce liabilities d. Determine net incomeWhat provides the framework for conducting return on assets (ROA) analysis by incorporating revenues and expenses to generate net profit margin, as well as inclusion of assets to measure asset turnover?What are depreciation and its purpose? Does the book value of a fixed asset (cost minus accumulated depreciation) communicate to a user what the asset is worth? Why or why not? Should the financial statements reflect the value of fixed assets? Why or why not?
- How can the quality of financial statements be compromised? Discuss fully and explain, giving a numerical example, how the choice of a depreciation method can influence the accuracy of reportable earnings.If depreciation expense is not recorded how would that affect financial statements and decision-makers?Describe the important properties of fixed assets? Compare and contrast the straight-line, units-of-activity, and double-declining balance depreciation methods ? Describe the accounting for intangible assets, such as patents, copyrights, and goodwill ? Describe current liabilities, including those related to accounts payable, accruals, notes payable, and the current portion of long-term debt?
