Question: Hello! Could someone help me with this? Im lost! The following is a note accompanying a recent financial statement of International Paper Company. Plants, Properties,

Hello! Could someone help me with this? Im lost!

Hello! Could someone help me with this? Im lost! The following is

The following is a note accompanying a recent financial statement of International Paper Company. Plants, Properties, and Equipment Plants, properties, and equipment are stated at cost, less accumulated depreciation. Expenditures for betterments are capitalized, whereas normal repairs and maintenance are expensed as incurred. The units-of-production method of depreciation is used for major pulp and paper mills, and the straight-line method is used for other plants and equipment. Annual straight-line depreciation rates are 2.50 percent to 8.50 percent for buildings, and 5 percent to 33 percent for machinery and equipment. Instructions a. Are the depreciation methods used in the company's financial statements determined by current income tax laws? If not, who is responsible for selecting these methods? Explain. b. Does the company violate the consistency principle by using different depreciation methods for its paper mills and wood products facilities than it uses for its other plants and equipment? If not, what does the principle of consistency mean? Explain. c. What is the estimated useful life of the machinery and equipment being depreciated with the following straight-line depreciation rates? 1. 5 percent. 2. 33 percent (round to the nearest year). Who determines the useful lives over which specific assets are to be depreciated? d. Why do you think a company would use accelerated depreciation methods for income tax purposes, rather than using the straight-line method

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!