CA11-2 (Unit, Group, and Composite Depreciation)

CA11-2 (Unit, Group, and Composite Depreciation) The certified public accountant is frequently called upon by management for advice regarding methods of computing depreciation. Of comparable impor- tance, although it arises less frequently, is the question of whether the depreciation method should be based on consideration of the assets as units, as a group, or as having a composite life.
Instructions
(a)   Briefly describe the depreciation methods based on treating assets as (1) units and (2) a group or as having a composite life.
(b) Present the arguments for and against the use of each of the two methods. (c)   Describe how retirements are recorded under each of the two methods.

 

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