Asked by Shanda Harrison on May 21, 2024
Verified
When the differences in useful lives of long-lived assets reflect real economic differences,the attempt on the part of financial analysts to undo these differences may
A) impede profit and loss comparisons.
B) enhance profit comparisons.
C) enhance profit comparisons,but impede loss comparisons.
D) enhance profit and loss comparisons.
Profit Comparisons
The process of analyzing changes in profit metrics over time or against industry benchmarks to gauge financial health or performance.
Economic Differences
The variations in economic conditions and outcomes among different regions, populations, or time periods, often studied to improve economic policies.
- Comprehend the variables that affect the carrying cost of long-term assets and the consequences of divergent depreciation approaches utilized.
Verified Answer
PG
Prakhar GuptaMay 21, 2024
Final Answer :
A
Explanation :
When differences in the useful lives of long-lived assets reflect real economic differences, trying to adjust or "undo" these differences can impede profit and loss comparisons because it may distort the actual economic reality reflected in the financial statements.
Learning Objectives
- Comprehend the variables that affect the carrying cost of long-term assets and the consequences of divergent depreciation approaches utilized.