The following key points are emphasized in this chapter:
The Pepsi Bottling Group once reported that its depreciation expense was lower, boosting the bottom line, due to successful maintenance allowing changes in asset depreciation. Depreciation lives on manufacturing equipment, for example, were changed to fifteen from ten years. The company said the change reduced depreciation expenses by about $58 million and increased earnings 22 cents a share. “The primary reason for this is that our extensive maintenance programs have enabled us to extend the operating lives of our assets well beyond their previous book lives,” said company management.
The methods used to account for property, plant, and equipment vary greatly across companies and can ...