Question

You have been asked to review the useful lives of your company's fixed assets and recommend...

You have been asked to review the useful lives of your company's fixed assets and recommend any appropriate changes. Your company uses incentive compensation broadly across management levels and the incentives are tied to current profits. If you recommend shorter useful lives it will have an adverse impact on profits in the short term. How should you approach this assignment?

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Answer #1

Answer :

The Useful existence of an Asset should be Estimated on the Reasonable premises having respects to Facts and Information Available.

Anyway you should not determine higher useful live (even shorter) so,as to demonstrate higher profits each year.As it will be hamper (or)show bogus picture of Company Financials.

Utilize reasonable estimates to determine correct Useful life and that can be changed when there is change in coming a very long time because of Change in facts.

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