W Company just bought ten new cars for its salespeople to use.The company expects to use these cars for two or three years and then replace them.If W Company calculates straight-line depreciation using an estimated useful life of two years,this accounting choice would be considered ________.

Question

Quizplus · Accepted Answer

Choosing a shorter estimated useful life for depreciation purposes (two years instead of three) results in higher depreciation expenses in the short term, which is a conservative accounting practice because it reduces reported earnings earlier.

W Company Just Bought Ten New Cars for Its Salespeople