ACC 422 Week 3 DQ 2

# ACC 422 Week 3 DQ 2

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Week 3 - DQ 2

What are the different methods used to calculate depreciation?

How does a company decide which method it should utilize?

How does its choice affect the financial statements?

Should companies standardize the method of depreciation to enhance comparability? Explain your answer.

Response #1 The methods used to calculate depreciation are the activity method, the straight-line method, decreasing charge methods (sum-of-the-years'-digits and declining-balance method), and special depreciation methods (group and composite methods and hybrid or combination methods). The activity method is based on the assumption that depreciation is "a function or use or productivity, instead of the passage of time" (Kieso, Weygandt, & Warfield, 2007, p. 525). The straight-line method, instead,...

ACC 422
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Excerpt from file: Week 3 DQ 2 What are the different methods used to calculate depreciation? How does a company decide which method it should utilize? How does its choice affect the financial statements? Should companies standardize the method of depreciation to enhance comparability? Explain your answer. Response

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