Depreciation continues to be one of the most controversial, difficult, and important problem areas in accounting.
1. a. Explain the conventional accounting concept of depreciation accounting, and
b. Discuss its conceptual merit with respect to
(1) The value of the asset,
(2) The amount(s) expensed, and
(3) The discretion of management in selecting the method.
2. a. Explain the factors that should be considered when applying the conventional concept of depreciation to the determination of how the value of a newly acquired computer system should be assigned to expense for financial reporting purposes. (Ignore income tax considerations for this case.)
b. What depreciation methods might be used for the computer system?