ACC 620 Week 3-1
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The purpose of deprecation is to utilize the matching principle. Matching the use of the equipment or asset (expense) to the revenue earned from the use. There ar e four types GAAP allo!ed methods of depr ecation. a) "tr aig ht lin e Met hod #) $nits o f P roduction Method c) "um of th e % ear s& 'igi ts d) 'ec li ning al anc e Meth od *nd the "um of the % ears& 'igits method to #e the most confusing. do not seem to understand ho! this method !ould accurately articulate the true deprecation. under the theory of more #eing deprecation in the *rst year and less each year follo!ing. do not understand ho! this !ould #e the #est method to use. thin+ the $nits of Production Method !ould actually #e the *rst choice, and the second choice !ould #e the straight line. -hich method do you thin+ !ould #e the most accurate
Transcript of ACC 620 Week 3-1
The purpose of deprecation is to utilize the matching principle. Matching the use of the equipment or asset (expense) to the revenue earned from the use. There are four types GAAP-allowed methods of deprecation. a) Straight-line Methodb) Units of Production Methodc) Sum of the Years Digitsd) Declining Balance MethodI find the Sum of the Years Digits method to be the most confusing. I do not seem to understand how this method would accurately articulate the true deprecation. I under the theory of more being deprecation in the first year and less each year following. I do not understand how this would be the best method to use. I think the Units of Production Method would actually be the first choice, and the second choice would be the straight line. Which method do you think would be the most accurate?
