Depreciation
The certified public accountant is frequently called upon by management for advice regarding methods of computing depreciation. Although the question arises less frequently, of comparable importance is whether the depreciation method should be based on the consideration of the assets as units, as a group, or as having a composite life.
Required:
1. Briefly describe the depreciation methods based on treating assets as:
a. Units
b. A group or as having a composite life
2. Explain the arguments for and against the use of each of the two methods.
3. Explain how retirements are recorded under each of the two methods.