Accounting assignment on: Depreciation methods

1. The company can increase its earnings by changing its depreciation method with the following ways such as:-

For changing the depreciation methods, there are no connections of real monetary costs and it is required to implement the proper depreciation methods. The statements that have been prepared could be changed. (Marietta.edu, 2005)

By the help of calculating the total expenses of depreciation and by creating the adjusted entry for each asset, there could have changes in the methods of depreciation. It can be done by different ways such as with the help of quantity in terms of production or the depreciation of straight line. It will increase the assets in the balance sheet. There will be the reduction in the tax deductions. It will also help to benefit the depreciation deductions with specific business assets. (Murray, 2012)

2. The company can gain high amount of profits with the help of proper modulation in the discussed lives of depreciable assets with the help of estimated production capacities and also with the help of developing the units of production with proper depreciation expenses. This will change the reflection of the results and also it will increase the depreciable lives of the assets with proper production facilities. The effect of change in the estimated service lives of the depreciable assets will help to increase the earning’s. There will also be the use of new technology and it will focus on estimating the useful life. The lives would be used in the computing depreciation expense which will be dependent on the estimates of the period and these lives will be assigned to the important property, plants and equipments and other future business plans. This way, there will be changes in the estimates which will reflect the results of the reviews. Thus the effect of change in estimates will increase the earnings and reduce the depreciation expense.

3. The company can meet with high level of profits by change in the estimated residual value of depreciable assets. The residual value of the depreciable assets is known as the net amount that can be expected to increase the service life of the assets. Thus the change in the estimated residual value of the depreciable assets will help to allocate the cost of the new life of the new residual value. The residual value of an asset will be based on the life of the service and it will determine the uses of new technology. This way there will be changes in the results of surplus and also there will be strong accounting policy to increment the depreciation on upward revaluation. It will enhance the depreciation over the residual life of the asset and also it will develop the useful life of the asset. The residual value is significantly important for dealing with the original cost so it measures the value of net cost and income for the specific period. It could meet with the changes for specific periods and it will be based on the reliable understanding of cost based cash flows. Thus it will contribute to increase the revenues and values. (Reit.com, 1996)

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