Question 1: What is the purpose of depreciation?
Does the book value of a fixed asset (cost minus accumulated depreciation) tell a user what the asset is worth? Why or why not?
Should the financial statements reflect the value of fixed assets? Why or why not?
Question 2: What are the different methods used to calculate depreciation?
How does a company decide which method they should utilize?
How does their choice affect the financial statements?
Should we standardize the method of depreciation to be used, to enhance comparability?
Explain your answer.
Question 3:
A. What is an intangible asset?
B. Should all intangible assets be subject to amortization? Why or why not?
C. Why are some intangible assets not amortized?
D. What is the implication to the financial statements?