How a long-term asset is depreciated

Reference no: EM13125627

How a long-term asset is depreciated can have a rather sharp result, especially for capital-intensive companies. As a result, should property be assigned a life and basis based on its economic value or on its physical life expectancy?

The implications of each can be major. Assume that you are acquiring a $10 million computer system that has an economic life of approximately 3 years, a physical life of 6 years, and a technological life of 2 years.

How would you depreciate this asset?

Which method would you use and why?

Reference no: EM13125627

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