Question

One company might depreciate a new computer over three years while another company might depreciate the same model computer over five both companies are right.

True
False

Answer 1

Companies have flexibility in determining the depreciation method and useful life for their assets. Both companies are correct in their chosen methods of depreciation.

Step-by-step explanation:

True. Companies have flexibility in determining the depreciation method and useful life for their assets. Depreciation is the allocation of the cost of an asset over its useful life. One company may choose to depreciate a new computer over three years, while another company may choose to depreciate the same model computer over five years. Both companies are correct as long as their depreciation methods comply with accounting standards and accurately reflect the asset's expected useful life.