Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 5

Depreciation Policies in Annual Reports

The following is a note accompanying a recent financial statement of International Paper Company:
Plant, Properties, and Equipment
Plant, properties, and equipment are stated at cost less accumulated depreciation.xpenditures for betterments are capitalized, whereas normal repairs and maintenance are expensed as incurred.he units-of-production method of depreciation is used for major pulp and paper mills, and the straight line method is used for other plants and equipment.nnual straight-line depreciation rates are, for buildings-2½ percent to 8½percent, and for machinery andequipment-5percent to 33 percent.
Instructions
a.re the depreciation methods used in the company's financial statements determined by current income tax laws If not, who is responsible for selecting these methods Explain.
b.oes the company violate the consistency principle by using different depreciation methods for its paper mills and wood products facilities than it uses for its other plant and equipment If not, what does the principle of consistency mean Explain.
c.hat is the estimated useful life of the machinery and equipment being depreciated with a straight-line depreciation rate of:
1.5 percent.
2.33 percent (round to the nearest year).
Who determines the useful lives over which specific assets are to be depreciated
d.hy do you think the company uses accelerated depreciation methods for income tax purposes, rather than using the straight-line method