How competitors calculate depreciation is most likely to affect comparisons between competitors if property,plant and equipment:
A)makes up a large percentage of assets and average useful lives are fairly different.
B)makes up a small percentage of assets and assets are financed in a different way.
C)makes up a small percentage of assets and average useful lives are fairly similar.
D)is primarily leased in the industry,not purchased.

Question

Quizplus · Accepted Answer

Different accounting methods for depreciation are likely to have a major impact on the comparability of financial ratios among competitors if property,plant,and equipment make up a large portion of total assets and the companies use a varying range of estimated useful lives for buildings and equipment.

How Competitors Calculate Depreciation Is Most Likely to Affect Comparisons