Accounting · Accounting Principles
An entity changes its depreciation method for a class of motor vehicles from the 'reducing balance' method to the 'straight-line' method. Which accounting concept or characteristic is primarily being balanced by this change?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Consistency: To ensure the same method is used from year to year to prevent profit manipulation.
- 2Faithful Representation: To ensure the method reflects the pattern in which the asset's future economic benefits are expected to be consumed.✓
- 3Comparability: To ensure that the entity uses the same method as its main competitors in the industry.
- 4Duality: To ensure that for every change in depreciation, there is an equal change in the asset register.
Correct answer
Faithful Representation: To ensure the method reflects the pattern in which the asset's future economic benefits are expected to be consumed.
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