- In the fourth year of an assetâ€™s 5-year useful life, the company decides that the asset will have a 6-year service life. How should the revision of depreciation be recorded? Why?
- In a recent newspaper release, the president of Keene Company asserted that something has to be done about depreciation. The president said, â€œDepreciation does not come close to accumulating the cash needed to replace the asset at the end of its useful life.â€
What is your response to the president?
DQ 2 — More About Long Term Liabilities
- In general, what are the requirements for the financial statement presentation of long-term liabilities?
- As a source of long-term financing, what are the major advantages of bonds over common stock? What are the major disadvantages in using bonds for long-term financing?