Final answer:
The same depreciation method should be used from year to year in order to maintain consistency and accuracy in financial reporting and analysis.
Step-by-step explanation:
The same depreciation method should be used from year to year in order to maintain consistency and accuracy in financial reporting. Depreciation is the allocation of the cost of an asset over its useful life, and it represents the decrease in value or wear and tear of the asset over time. By using the same method year after year, businesses can ensure that their financial statements reflect a consistent and reliable depreciation expense.
Using the same depreciation method allows for easier comparisons between different accounting periods. It provides a standardized way to measure the decrease in value of assets and helps in accurately evaluating the financial performance of a business over time.
For example, if a business changes its depreciation method from straight-line to declining balance, it might result in artificially inflating or deflating the reported profits, leading to misleading financial statements. Consistency in using the same depreciation method from year to year is crucial for reliable financial reporting and analysis.