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The certified public accountant is frequently called upon by management for advice regarding methods of computing depreciation. Although the question arises less frequently, of comparable importance...

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The certified public accountant is frequently called upon by management for advice regarding methods of computing depreciation. Although the question arises less frequently, of comparable importance is whether the depreciation method should be based on the consideration of the assets as units, as a group, or as having a composite life.

Required
1. Briefly describe the depreciation methods based on treating assets as:
a. Units
b. A group or as having a composite life
2. Explain the arguments for and against the use of each of the two methods.
3. Explain how retirements are recorded under each of the two methods.

Answered Same Day Dec 31, 2021

Solution

Robert answered on Dec 31 2021
108 Votes
The certified public accountant is frequently called upon by management for
advice regarding methods of computing depreciation. Of comparable
importance, although it arises less frequently, is the question of whether the
depreciation method should be based on consideration of the assets as units,
as a group, or as having a composite life.
Instructions:
(a) Briefly describe the depreciation methods based on treating assets as (1)
units and (2) a group or as having a composite life.
Composite depreciation uses single straight-line depreciation rate for all the assets in
a group and uses average useful life. The method is used to calculate depreciation
for an entire asset class, or when there are a number of assets comprising a single
larger asset; useful lives may...
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