Depreciation

*<Tab/>Introduction Financial statements are usually prepared by an entity to communicate information about its financial performance, position, cash flows, and movement of equity to users and help them make decision. A statement of accounting policies is specified with these statements to help users understand how the information is collected and make it understandable and useful. In this essay, the author will attempt to explain the importance of understanding which accounting …

…if they adopted different accounting policies. In all, when firms make choice of depreciation method to apply on property plant and equipment, they should consider the useful economic life of the asset, complexity of calculation, existence of residual value and also the accuracy, reliability information reflected to users as well. Reference: Caims, D. Financial Times. London: Aug 12, 1999. pg. 23 Ron, P. Accountancy. London: Oct 1, 2003 pg. 1 Bourke, D. H. Principles of Accounting. Ch3 and Ch8 Word Count: 1362