When examining an external financial report a ratio that can be useful in determining the approximate age of the assets is:

Question

Quizplus · Accepted Answer

The ratio of accumulated depreciation to the average recorded property, plant, and equipment at cost can provide an approximation of the age of the assets. As assets age, their value decreases, and the accumulated depreciation value will increase. Dividing this value by the average recorded property, plant, and equipment at cost will give an estimate of how long ago the assets were acquired.

When Examining an External Financial Report a Ratio That Can