How Competitors Calculate Depreciation Is Most Likely to Affect Comparisons

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.
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.

Correct Answer:

Verified

Show Answer