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Applicable Methods of Depreciation

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1. There are several different methods of depreciation for assets. Which is the most accurate in the following situations and why?

a. A machine used to make widgets in a factory.
b. A delivery truck that only makes in town deliveries.
c. A 737 Airplane.

2. Why is there mark to market for securities but not other assets? What other assets should be shown at FMV compared to historical costs and why?

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Solution Summary

This solution of 198 words explains the different methods of depreciation for assets for specific cases and also the market for securities.

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a. Depreciation per unit produced. The machine is more likely to need maintenance when the production rate is high, hence we can offset more of the maintenance cost by having an appropriately adjusted depreciation amount.

b. Straight line. It doesn't really matter what amount we ...

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