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

Question

Quizplus · Accepted Answer

The principle of consistency in depreciation policies requires that a company use the same depreciation method from year to year for a given capital asset. This ensures that the financial statements are comparable across different periods and enables users of the financial statements to make informed decisions. While disclosing the depreciation method on the financial statements (option A) is important, it is not the main focus of the principle of consistency. Using the same depreciation method as other companies in the same industry (option C) and using the same depreciation method for all assets (option D) are not necessarily required by this principle.

With Respect to Depreciation Policies,the Principle of Consistency Means