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A new accountant has been appointed to Albatross Ltd and has implemented major changes in the calculation of depreciation. As a result, some parts of the factory are now subject to higher depreciation charges. This has incensed some operations managers who argue that they take particular care in the maintenance of their machines and, as a result, should not attract such large depreciation charges. They are concerned that these extra charges will reduce the profitability of their sections and may therefore lead to lower bonuses and maybe even the firing of some employees. These operations managers have complained to the group accountant.
Question 1: How can we create a report to these operations managers explaining the reasons for the depreciation policies adopted by Albatross Ltd.
Financial Statement Analysis and Preparation
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