Why is the continuity assumption important with respect to the accounting for long-lived tangible assets?
A)It helps a company decide whether to use straight-line depreciation or an accelerated depreciation method.
B)It justifies depreciating the asset over its expected useful life, without anticipating that the business will liquidate in the near future.
C)It provides justification for including residual values in calculating depreciation.
D)It is consistent with maintaining assets in the accounting records at market value rather than acquisition cost.

Question

Quizplus · Accepted Answer

The justification for allocating an asset's cost over its useful life is that the business entity is a going concern.

Why Is the Continuity Assumption Important with Respect to the Accounting