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C) BV drastically slowed its depreciation (amortization) of hit* video tapes at the start of 1988. In 1987 BV depreciated its rental videotape hits over
C) BV drastically slowed its depreciation (amortization) of "hit* video tapes at the start of 1988. In 1987 BV depreciated its rental videotape "hits" over nine months, straight line. At the start of 1988, it switched to a method it called "36 month accelerated." The financial statements do not disclose how accelerated the curve is, but do say that the company uses 150% of straight line, computed on a monthly basis. Thus, the resulting depreciation is as follows: First 12 months 40% Second 12 months 30% Third 12 months 30% 4) Over what period does BV depreciate its "base stock" videotapes? 5) What was the effect on earnings per share of the change in depreciation method for "hit" tapes (assume that hit tapes made up 25% of new tape purchases, and that the average hit tape was owned for half the year)
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