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Depreciation Need Not Be Arbitrary
Citation
Lane, J and Willett, RJ, Depreciation Need Not Be Arbitrary, Accounting and Business Research, 27, (3) pp. 179--194. ISSN 0001-4788 (1997) [Refereed Article]
Copyright Statement
Copyright 1997 Routledge
DOI: doi:10.1080/00014788.1997.9729543
Abstract
Following Thomas (1969, 1974) the depreciation adjustment charged against accounting earnings is nowadays commonly presumed to be entirely arbitrary when it is viewed from a measurement perspective. This paper develops a statistical interpretation of accounting measurement to show that the depreciation calculation need not necessarily be viewed as incorrigible in Thomas's sense. A probability modelling approach is adopted to illustrate how the depreciation adjustment can be used to smooth accounting earnings over time. Depreciation is thus shown to have potentially useful estimation properties. The results have obvious policy implications regarding the objectives that depreciation and other accounting allocations might serve. They also have a bearing on fundamental questions regarding the nature of accounting measurement.
Item Details
Item Type: | Refereed Article |
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Research Division: | Commerce, Management, Tourism and Services |
Research Group: | Accounting, auditing and accountability |
Research Field: | Accounting theory and standards |
Objective Division: | Economic Framework |
Objective Group: | Measurement standards and calibration services |
Objective Field: | Service industries standards and calibrations |
UTAS Author: | Willett, RJ (Professor Roger Willett) |
ID Code: | 100543 |
Year Published: | 1997 |
Deposited By: | TSBE |
Deposited On: | 2015-05-19 |
Last Modified: | 2015-06-09 |
Downloads: | 0 |
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