Which of the following should be the main determinant for selection of the allocation method for long-term operational assets?
A) The method that is most convenient to compute
B) The method that best matches the pattern of asset use
C) The method that provides the greatest return to the stockholders
D) The method that provides the best tax advantage

Question

Quizplus · Accepted Answer

The selection of allocation method for long-term operational assets should be based on the method that best matches the pattern of asset use. This ensures that the expense of using the asset is allocated fairly and accurately over its useful life.

Answer: D 
 The event of Belvedere Company recognizing $2,500 of depreciation expense on a delivery van affects the horizontal financial statements model as follows:
- Income Statement: Decrease in net income by $2,500 due to the recognition of depreciation expense
- Balance Sheet: Decrease in the value of the delivery van by $2,500 due to the recognition of depreciation expense
Therefore, the answer is "D" which stands for "Decrease" on the Income Statement and the Balance Sheet.

Which of the Following Should Be the Main Determinant for Selection