Understand the reporting effect: Do estimates by management affect the amount of depreciation in its company$$s financial statements?

multiple choice $1$

Yes

No

Specify the options: To increase earnings in the initial years following the purchase of a depreciable asset, would management: Evaluate each of three options separately.

$($a$)$ Choose straight$-$line or double$-$declining$-$balance.

multiple choice $2$

Straight$-$line

Double$-$declining

$($b$)$ Estimate a longer or shorter service life.

multiple choice $3$

Longer service life

Shorter service life

$($c$)$ Estimate a higher or lower residual value.

multiple choice $4$

Higher residual value

Lower residual value

Identify the impact: Are decisions of investors and creditors affected by accounting estimates?

multiple choice $5$

Yes

No

Make a decision: Should a company alter depreciation estimates for the sole purpose of meeting expectations of Wall Street analysts?

multiple choice $6$

Yes

No