Changes in the depreciable lives of equipment may be identified through a substantive audit procedure that includes analyzing depreciation expense as a percent of assets.

Question

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Analyzing depreciation expense as a percent of assets can help identify changes in depreciable lives of equipment because if the percentage is significantly different from previous years, it could indicate that the useful life or salvage value of the asset has changed and therefore the depreciable life needs to be adjusted.

Changes in the Depreciable Lives of Equipment May Be Identified