Assume that two firms are both following generally accepted accounting principles. Both firms commenced operations two years ago with $1 million of identical fixed assets, and neither firm either sold any of those assets or purchased any new fixed assets. The two firms would be required to report the same amount of net fixed assets on their balance sheets as those statements are presented to investors.

Question

Quizplus · Accepted Answer

The firms may use different depreciation methods under GAAP, leading to different net fixed asset values on their balance sheets.

Assume That Two Firms Are Both Following Generally Accepted Accounting