Question - In business, assets are not just things that a business owns, assets are used to generate revenues. For example, if you operate a local restaurant and provide catering services, the truck used to make the deliveries to customers is more than a vehicle you own, it is an asset used to generate additional streams of income into the business. The longer your assets can be used in the business to create income, the better the return on the investment in that particular asset. However, this is not always possible because of the wear and tear that occurs.
1. What should companies consider before choosing a method of expensing long-lived-assets cost?
2. What are some benefits and risk of various depreciation methods on a company's net income?