The Accounting Review Vol. 26 No. 1 1951
STRAIGHT-LINE METHOD OF DEPRECIATION.
Abstract
A great deal of controversy has taken place recently covering the field of depreciation and the acceptable method to be applied in the allocation of the expenditure of fixed assets to revenue. Every accountant knows that the straight-line method is not used in order to give the true depreciation but is used only for the reason that it is a convenient way of estimating the depreciation charge. The accounting principles governing the charging of expenditure on fixed assets to revenue are the same as those governing the charging of current expenditure to revenue and there can be no question of setting aside amounts out of profits to meet the expense. The fundamental proposition in regard to depreciation arises from the necessity of presenting income statements for periods of shorter duration than the life of the assets. It has been stated that the same principle underlying the charging of depreciation against revenue exists as applies to any other expense and therefore the general concept underlying the presentation of a true statement of operations, namely, the attempt to make an accurate matching of cost and revenue forms the fundamental basis under which a justification exists for the charging of depreciation against the revenue of a given period.
- DOI
- 10.2308/tar-7070035
- Volume
- 26
- Issue
- 1
- Pages
- 40-42
- Language
- en
- Sources
- openalex crossref