identify the different depreciation methods and discuss how the choice of depreciati 555780

Analysis of Long Lived Assets, Part 2 – Analysis of Depreciation and Impairment
a. Identify the different depreciation methods and discuss how the choice of depreciation method affects a company’s financial statements, ratios, and taxes.
Explain the role of depreciable lives and salvage values in the computation of depreciation expenses, and compute and describe how changing depreciation methods or changing the estimated useful life or salvage value of an asset affects financial statements and ratios.
b. Discuss the use of fixed asset disclosures to compare companies’ average age of depreciable assets, and calculate, using such disclosures, the average age and average depreciable life of fixed assets.
c. Define impairment of long lived assets and explain what effect such impairment has on a company’s financial statements and ratios.
d. List the requirements of SFAS 143, Accounting for Asset Retirement Obligations
(AROs), and explain the likely financial statement and ratio effects for most firms.

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