The company's choices for determining the fixed asset's useful life and residual value impact the amount of depreciation recorded.

Question

Quizplus · Accepted Answer

The useful life and residual value of a fixed asset are factors that affect the calculation of depreciation expense. The longer the useful life and the higher the residual value, the lower the amount of depreciation expense recorded each year. On the other hand, a shorter useful life and lower residual value result in a higher depreciation expense. Therefore, the company's choices for these factors directly impact the amount of depreciation recorded.

The Company's Choices for Determining the Fixed Asset's Useful Life