An annual report for Ford Motor Company contained the following note:
Significant Accounting Policies
Depreciation of Property, Plant, and Equipment. Property and equipment are stated at cost and depreciated primarily using the straight- line method over the estimated useful life of the asset. Useful lives range from 3 years to 36 years. The estimated useful lives generally are 14.5 years for machinery and equipment and 30 years for buildings and land improvements. Special tools placed in service beginning in 1999 are depreciated using the units of production method over the expected vehicle model cycle life. Maintenance, repairs, and rearrangement costs are expensed as incurred.
Why do you think the company changed its depreciation method for special tools acquired in 1999 and subsequent years?

  • CreatedAugust 04, 2015
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