Question

Erickson Industries is preparing its yearly financial statements. When preparing these statements, Erickson needs to include:

I. The firm's depreciation expense for the period.
II. Details demonstrating how the firm's depreciation amounts were calculated.
III. Balances of the firm's major classes of depreciable assets, grouped by nature and function.
IV. The firm's accumulated depreciation, either by major classes of depreciable assets or in total.
A. I, III, and IV.
B. II, III, and IV.
C. I, II, and III.
D. I, II, and IV.

Answer 1

Erickson Industries needs to include depreciation expense, details of the calculation, balances of major classes of depreciable assets, and accumulated depreciation in its financial statements.

Step-by-step explanation:

The subject of this question is Business and the grade level is High School.

When preparing financial statements, Erickson Industries needs to include the following:

I. The firm's depreciation expense for the period. Depreciation expense represents the allocation of the cost of a company's assets over their useful lives. It is an important expense to include in financial statements, as it impacts the company's net income.

II. Details demonstrating how the firm's depreciation amounts were calculated. These details can include the method of depreciation used, the useful life of the assets, and any salvage value.

III. Balances of the firm's major classes of depreciable assets, grouped by nature and function. This information provides insight into the company's investment in assets and helps users of the financial statements understand the composition of the assets.

IV. The firm's accumulated depreciation, either by major classes of depreciable assets or in total. Accumulated depreciation is the total amount of depreciation expense that has been recorded since the acquisition of the assets. It is subtracted from the cost of the assets to determine their net book value.

Therefore, the correct answer is option D. I, II, and IV.