Suppose that you are Dear FASB, the question$-$and$-$answer person for a magazine called Rural Business. Rural Business is a magazine devoted to serving the needs of small and medium sized businesses in rural communities. Readers of your magazine are invited to submit letters to Dear FASB, who offers advice in "Dear Abby" style in a special section of the magazine. Your editor$$s policy is to require revision whenever she believes a nonaccountant would have

difficulty understanding a response. One day you receive the following letter:

Dear FASB,

What standards do corporation$$s have to follow concerning depreciation?

My concern is that managements are selecting methods which place the best

possible light on financial results depending upon whom the audience is without

regard to the truth.

Recently, I decided to begin investing in the stock market and have

received the published financial reports of $10$ companies I thought would provide

good growth potential. When I began analyzing them, I discovered that no two

have the same approach to reporting depreciation. Most use different methods

for tax purposes and financial reporting purposes $$ a significant deferred income

tax amount is reported by these companies. Also, most use different methods for

different assets, for example: Company A uses straight$-$line for buildings, doubledeclining balance for vehicles, and units$-$of$-$production for manufacturing

equipment. Company B follows the same policies except it uses Sum$-$of$-$theYears$-$Digits for manufacturing equipment.

Two companies have a paragraph explaining a unique method they use

to properly report depreciation of financial assets. One uses an annuity method,

and the other uses an interest method. All ten firms received an unqualified audit

opinion from large CPA firms.

I was under the impression that the accounting discipline and profession

was supposed to provide comparable information helping users to make financial

decisions. My sample of $10$ firms leads me to believe that company managements use auditors and accounting standards to report whatever result they wish. Is my conclusion correct, or am I missing something?

Sincerely,

Depreciation Challenged

Required: Your task is to write an answer to Depreciation Challenged. Because space in your magazine is limited$,$ restrict your answer to $230$ words in the body of the response. The document must have reasonable margins and font setting.