You are studying with some classmates, and you are reviewing each other’s responses to the following questions:
“Why do companies depreciate their equipment? What does it mean if the straight-line depreciation method is used? What does the carrying amount of equipment represent?”
Your classmate responded as follows:
“Companies depreciate their equipment over time because they understand that from the date of purchase equipment immediately begins to lose value. The straight-line method assumes that the equipment loses its value at the same rate over its useful life. The carrying amount is what the equipment is worth if it were to be sold.”

Required

Identify how your classmate’s answer could be substantively improved.