Question

The 2001 annual report for General Motors Corporation contained the following note:

Note 3. Significant Accounting Policies
Property, Net
Property, plant, and equipment, including internal use software, is recorded at cost. Major improvements that extend the useful life of property are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. At January 1, 2001, we adopted the straight-line method of depreciation for real estate, facilities, and equipment placed in service after that date. Assets placed in service before January 1, 2001, continue to be depreciated using accelerated methods. The accelerated methods accumulate depreciation of approximately two-thirds of the depreciable cost in the first half of the estimated useful lives of property groups as compared to the straight-line method, which allocates depreciable costs equally over the estimated useful lives of property groups.

Required:
Why do you think the company changed its depreciation method for real estate, facilities, and equipment placed in service after January 1, 2001, and subsequent years?



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  • CreatedJuly 01, 2014
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