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Thus, if the asset's usefulness will decline consistently after the first year of usage, it is best to use one of the accelerated depreciation methodologies, which will calculate a higher depreciation rate in the first year of usage (when the asset is producing most for the company) and a lower one in the subsequent years, when the asset is less useful for the company. Accelerated methods include the declining balance method and the sum-of-the-years-digits methods.
3. Answering this question first requires a differentiation between accounting (and accounting related activities) and physical reality. For example, cost flow assumption may not always reflect physical flow. In accounting, inventory errors generally correct themselves in the following years, mainly because the accounting methodologies can regulate the values in the following years. But physically, of course, is something different.
4. Basically, GAAP allows various methods of inventory valuation because it seems appropriate for the company to choose the accounting methodologies it sees fit, according to the business it activates in. In this sense, it may be the case that the company activates on markets with...
In such a situation, the company will need to adapt its inventory valuation methodologies to best fit its interest. It shouldn't be proper to impose a LIFO valuation method when a FIFO is better applicable in a given possibility. GAAP properly decided to give a free hand to companies so that, given a certain situation, they can choose according to their own needs.
5. In my opinion, the essential issue is not whether or not choosing a valuation method to affect the company's bottom line for tax purposes is the main issue here, but whether the method chosen is compliant with the legislation at use. In this sense, as long as the method is legal, there is no point discussing the ethics involved as, in this case, ethics somewhat becomes equivalent to the method's legality. As far as ethics is concerned, the company is free to choose whatever valuation methodology it feels appropriate for its interests. Certainly, this may be considered a business-like approach, where ethics is subordinated to the company's goal, which is maximising its profit, but it is my opinion that this is also the correct approach in this case.
Themido, I., A. Arantes, C. Fernandes & A.P. Guedes. (2000). Logistic costs case study: An ABC approach. The Journal of the Operational Research Society, 51 (10): 1148-1157 Stable URL: http://www.jstor.org/stable/253927 The use of Activity-Based Costing (ABC) reflects the fact that indirect costs and overhead costs are often more draining to modern organizations than direct costs. The article specifically discusses the use of ABC in terms of its use in costing logistics services. Traditional costing
Joint costing systems should bear in mind the legal constraints on the use of such systems, and should provide accurate information to managers in order to be most useful in the managerial accounting context. Firms need to remain competitive, which indicates that the market will set prices to some degree. This implies that firms can make better decisions with respect to what projects/products they wish to pursue by understanding the
Vaughan, J.L., Leming, M.L.M., Liu, M., & Jaselskis, E., 2013. Cost-Benefit Analysis of Construction Information Management System Implementation: Case Study. Journal of Construction Engineering and Management. Managers working within construction projects encounter significant expenditure of resources in collecting project data, evaluating production rates, and exchanging information with project stakeholders. The paper focuses on the execution of project tasks through manual reduction of inefficiency as well as improved effective operations in
PTSD Resilience & Treatment In this section, two objectives are addressed: the methodology that has been used in this work is explained and secondly, the reasons for choosing this particular methodology are offered. To aid explanation of the premises, eight headings have been identified as under: Research philosophy; Time horizons and research type; Sample Description; Data Quality issues; and The eight headings will make it easier to understand the logic behind the study itself as
Many organizations have sufficient control over their cost drivers, specifically those that work with activity-based costing; these companies can locate a sufficient amount of cost information within the company to accomplish these analyses in a timely fashion (Chatzkel, 2003). In reality, though, ABC systems are typically structurally complex and, in spite of the need for complete integration of such ABC systems, many such systems remain as stand-alone analysis tools
Emergency, Planning and Operations Methodology In your opinion what were the main issues expressed by the States Concerning Homeland Security and states rights at the 2002 State Emergency Response Commission Conference? Please justify your position. Most of the states attending the 2002 State Emergency Response Conference expressed an overall sentiment that in relation to security, things are going to vary from state to state based on the capabilities of the emergency response agencies