Allocating the Cost of Operating Assets Brunwist, Inc., a holding company with operating divisions in significantly different types of businesses, is reviewing the depreciation methods used by its divisions. The company controller has recommended to the president that all divisions classify their assets into one of four categories, based on the asset type. The controller has suggested they be classified as buildings, production equipment, office equipment, or other. For each category, all divisions would use straight-line depreciation over the same number of years and would assume no salvage value.

How might the adoption of uniform depreciation methods across all divisions provide useful information to financial statement users?

. How might the adoption of uniform depreciation methods across all divisions provide financial statement users with misleading information?

. Some of Brunwist’s operating divisions currently use straight-line depreciation and some use double-decliningbalance depreciation. Under what conditions would straight-line depreciation provide useful information on the cost of using depreciable assets? Under what conditions would an accelerated depreciation method such as doubledeclining-balance provide more useful information?

. Why should the company consider using something other than straight-line depreciation for federal income tax reporting purposes? What is the advantage in doing so?