Explain why we depreciate assets over their useful lives instead of just expensing them in the year they are acquired?

1 answer:

8 0

We depreciate assets over their useful lives instead of just expending them in the year they were acquired because let's say, when we exhaust a 5 year asset in a year, the 1st year is understated because the whole expense of the asset has been fully utilized in just 1 year, while the remaining 4 years are overstated,

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When information about two different enterprises has been prepared and presented in a similar manner, the information exhibits t

Dima020 [189]

Answer:

Comparability

Explanation:

Comparability is a characteristic of the information presentation of accounting information. It is required that the use of standardized accounting principles aid in making the accounts of two different enterprises to be compared to enable decision making among investors or for the allocation of investible resources. Without this comparability it becomes difficult to determine where resources would be put. Comparability can also be applied with the same company when it is able to compare its performance from one period to the other. This is also enabled by the use of standardized principles which have been consistently applied.

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3 years ago

Managerial economics

lbvjy [14]

Answer:

d. ensures managers always make good decisions.

Explanation:

Managerial economics is the study of the economics theory with accounting managerial scope to ensure the decision taken are as required within the business practices. It helps managers to solve accounting problems and make decision using economic theory and laws.

It provides a basis to solve and give the best solutions at all times even under constraints or in the time of scarcity. It uses quantitative methods and statistical tools to get better result oriented strategies.

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3 years ago

When valuing a preferred stock, the type of security that we treat the preferred stock like, for valuation purposes, is

Luba_88 [7]

Answer:

Perpetuity.

Explanation:

This is explained to be a type of annuity which is seen to be in position of receiving infinite amount of payments periodically. It is also tagged to be a financial instrument that is seen to pay consistently but periodically. In our world today, it is put to be the present value of a stream of cash that goes on, into the future, forever. In as much as cash payments are infinite, it’s possible to calculate their present total value because the value of each payment incrementally decreases with each year to the point that it approximates zero. Research has shown that in a lot of cases, economic analysts are seen to use this calculation to determine the value of stocks that pay fixed dividends, real estate that earns rent and annuity insurance products.

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3 years ago

Which of the following statements is true about the constant growth model?

Eduardwww [97]

Answer: The constant growth model can be used if a stock's expected constant growth rate is less than its required return.

Explanation:

The Constant Growth Model is a stock valuation method.

It assumes that a company's dividends are increasing at a constant growth rate indefinitely.

Formula: Current price = (Next dividend the company is to pay) ÷ (required rate of return for the company - expected growth rate in the dividend.

When expected constant < required return, then the constant growth model can be used.

Hence, the statement is true about the constant growth model :

The constant growth model can be used if a stock's expected constant growth rate is less than its required return.