31. Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.

During inflationary periods, a company's reported net income is least likely to be overstated relative to economic income if the company depreciates fixed assets using:

Select exactly 1 answers from the following:

A. accelerated depreciation and long average lives.

B. accelerated depreciation and short average lives.

C. straight-line depreciation and long average lives.

D. straight-line depreciation and short average lives.

答案和详解如下！

Feedback: Correct answer: B

The Analysis and Use of Financial Statements, 3rd edition, Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried (Wiley, 2003), pp. 266?68

2006 Modular Level I, Vol. II, pp. 835-838

Study Session 9-41-a

identify the different depreciation methods, discuss how the choice of depreciation method affects a company抯 financial statements, ratios, and taxes, explain the role of depreciable lives and salvage values in the computation of depreciation expenses, and compute and describe how changing depreciation methods or changing the estimated useful life or salvage value of an asset affects financial statements and ratios

During inflationary periods, the difference between historic cost and replacement value becomes greater; using accelerated depreciation and short average lives will produce reported net income that is closer to economic income.

谢谢LZ