Some companies have depreciation policies that differ substantially from the norm of their industry. For example, Cineplex Odeon (now operating as AMC Theaters in the United States and Cineplex Entertainment in Canada) depreciated its theater seats, carpets, and related equipment over 27 years, much longer than most of its competitors. Another example is Waste Management. Compared with industry norms, Waste Management used longer useful lives and larger salvage values for garbage trucks and container assets.
Growing companies can increase their current income by depreciating fixed assets over a longer period of time or by utilizing a higher estimated salvage value. Sometimes companies lengthen the depreciable lives or increase the salvage value estimates of their fixed assets when a boost in income is desired. Comment on the ethical implications of the choice of useful life or salvage value for depreciation purposes, with special reference to the policies of Cineplex Odeon and Waste Management.

  • CreatedFebruary 20, 2015
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