With respect to depreciation policies, the principle of consistency means:
A) a company should use the same depreciation methods as other companies in the same industry.
B) a company should disclose on the financial statements the depreciation method for all its capital assets.
C) a company should use the same depreciation method in computing depreciation expense on all its assets.
D) a company should use the same depreciation method from year to year for a given capital asset.

Question

Quizplus · Accepted Answer

The principle of consistency in depreciation policies states that a company should use the same depreciation method from year to year for a given capital asset. This ensures that financial statements are comparable over time and that the accounting treatment for assets is consistent throughout the company. While disclosing the depreciation method on financial statements and using industry-standard methods are important, they are not specifically related to the principle of consistency.

With Respect to Depreciation Policies, the Principle of Consistency Means