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One way that financial accounting tends to smooth income is by recording depreciation over time, rather than simply recording the cost of equipment as an
One way that financial accounting tends to smooth income is by recording depreciation over time, rather than simply recording the cost of equipment as an expense when the equipment is purchased. It seems that recording depreciation according to a stated schedule, say straight line or even accelerated depreciation, as long as you know the figures ahead of time, makes accounting less useful. I guess I mean that in the sense that accounting reports, as they come out, are not informing us of anything we didn't know before. Once we know the depreciation schedule for the life of the equipment, that line item on the income statement, cannot tell us anything new for any report that comes out during the life of the equipment Required: a. Is there any value to smoothing the income with depreciation over the useful life of equipment, rather than the more volatile approach of reporting, say, the sales value of the equipment during its useful life
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