The annual report tor Eastman Kodak contained the following note:

Required: 1. Explain the term historical cost. What is the meaning of '"provision for depreciation"? 2. Why do you think the company changed its depreciation method for assets acquired in 1992 and subsequent years'? What impact did the change have on net income?

Transcribed Image Text:

Significant Accounting Policies Depreciation Depreciation expense is provided based on historical cost and the estimated useful lives of the assets. The Company generally uses the straight-line method for calculating the provision for depreciation. For assets in the United States acquired prior to January 1, 1992, the provision for depreciation is generally calculated using accelerated methods.