In recent years major efforts have been made to standardize accounting practices in different countries; this is
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a. Depreciation method is one of the accounting practices studied by Emenyonu and Gray. Three methods were considered-the straight-line method (S), the declining balance method (D), and a combination of D & S (sometimes European firms start with the declining balance method and then switch over to the straight-line method when the figure derived from straight line exceeds that from declining balance). The data in Table 12.5 summarize the depreciation methods used by a sample of 78 French, German, and U.K. firms. Use these data and the results of the chi-square analysis in Table 12.5 to test the hypothesis that depreciation method is independent of a firm's location (country) at the .05 level of significance.
b. Perform a graphical analysis to study the relationship between depreciation method and country. What conclusions can be made about the nature of the relationship?
TABLE 12.5
Depreciation Methods Used by a Sample of 78 Firms
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Related Book For
Business Statistics In Practice
ISBN: 9780073401836
6th Edition
Authors: Bruce Bowerman, Richard O'Connell
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