Monday, September 23, 2019
Responses to DQ1Selling ReceivableDW and DQ2 Use of Depreciation CH Essay
Responses to DQ1Selling ReceivableDW and DQ2 Use of Depreciation CH - Essay Example The mechanism of factoring is a good way for companies to improve their liquidity and cash position. DQ2 Your premise that depreciation is a technique that is used to devalue an asset instead of being a method for asset valuation is completely correct. When I first read the message of the president of Keene Company I thought, Ã¢â¬Å"Where did this guy go to business schoolÃ¢â¬ . The premise the person stated is illogical. The person is mixing accounting concepts. Depreciation only has one purpose which is to devalue an asset through the passage of time. As you stated in your response book value and market values are different. There are different methods of depreciation that can be used by an accountant. Four depreciation methods are declining balance, sum of year digits, straight line, and the modified accelerated cost recovery system (MACRS) (Fixedassetssoftware, 2011). The MACRS method is an accelerated depreciation method that is used of assets that lose value fast such as comp uters. References Besley, S., Brigham, E. (2000). Essentials of Managerial Finance (12th ed.). Fort Worth: The Dryden Press. Fixedassetssoftware.com (2011). Depreciation Methods. Paragon Systems.