What role does ethics play in choosing and applying a depreciation method? what role does ethics play in choosing and applying a depreciation method?

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Alexis Bautista

Business

9 September, 19:59

What role does ethics play in choosing and applying a depreciation method? what role does ethics play in choosing and applying a depreciation method?

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Maria Fisher · Answer 1

Ethics demands reasons to be given for changing from one depreciation method to another. There are three depreciation methods that are applicable including double-declining balance technique, unit of production technique, and straight-line technique.

Changing from one depreciation method to another must be done in the best interests of shareholders and reasons for such a change must be disclosed. Therefore, ethics requires a company to reveal the changes in depreciation method and adhere to the accounting principles related to the method used.