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The study aims to investigate the impact of indirectly evoked incentives, in the form of supervisor’s preferences, on the decision about accounting policy regarding depreciation method selection and to examine subsequent post-decision distortion by evaluating the depreciation method.

The authors conducted two experiments with control and treatment groups, manipulating the supervisor’s indirectly evoked preferences. In Study 2, the authors also measured the evaluation of both depreciation methods to investigate post-decisional distortion regarding the assessment of the depreciation method chosen in a decision task. Study 1 was conducted among 85 accounting students, while Study 2 consisted of 200 accountants.

Both studies revealed the significant impact of supervisor’s indirectly evoked preferences on accounting policy decisions. Participants who were aware of supervisors’ preferences were more likely to choose the depreciation method that was consistent with those preferences. The authors also found that those participants attached a higher value to the depreciation method, providing evidence that adherence to the supervisor’s preferences results in a distorted assessment of the depreciation methods.

First, this study shows that indirectly evoked supervisors’ preferences may lead to a departure from substantive criteria resulting in low-quality accounting outcomes. Second, the assessment of the depreciation method is inseparable from the situational context, as the evaluation of the depreciation method is interdependent upon the preferences of the choice of a depreciation method and the fulfillment of those preferences.

This paper aims to complement a more conventional positive accounting theory (PAT)‐based study of accounting method choice in Egyptian firms by examining three alternative computational reasons for depreciation method choice: simplicity; compatibility with industry norm; and suitability for class of asset.

The paper draws on a questionnaire survey, sent to Egyptian companies, in which managers were asked to indicate their reasons for choosing depreciation methods as well as the actual depreciation methods used.

The paper finds that technical reasons were frequently given in survey responses from managers. However, the available evidence on the actual depreciation methods used by their firms and industries is in fact more consistent with PAT‐based theories of accounting choice than with such alternatives. This suggests that the responses to the survey reflected managers' rationalisations of decisions made for self‐interested purposes.

Most recent work on managerial decisions concerning accounting choices utilises data gathered from databases of published financial information and is undertaken within a PAT context. This study extends that approach by utilising the results of a questionnaire distributed in Egypt to test some additional hypotheses that reflect possible technical accounting reasons for justifying depreciation methods.

Both financial and non-financial functions are imbedded in the life-cycle management activities of building assets. These functions provide relevant information for the establishment of operational and maintenance strategies and for decision-making processes related with the timing of major repairs, replacements and rehabilitations. The purpose of this paper is to focus on improving the alignment of financial and non-financial functions related to the recognition that the service potential of buildings should be appropriately funded as it is consumed over its life cycle.

Authors undertake an analysis of depreciation rates used to accommodate a systematic allocation of the depreciable amount of building assets over its useful life. Different depreciation approaches and calculation methods are explored. A case study of a school building portfolio is used to debate situations of misalignment of financial and non-financial depreciation rates. Data mining methods including decision tree and clustering are used to predict equivalent functional depreciation rates of buildings system and subsystems and promote an enhanced alignment with regulated financial depreciation rates toward an optimized life-cycle management of the school building portfolio.

Historical data show the relevance of considering technical and functional characteristics of the building system and their subsystems (landscaping; structure; external elevations and roofs; interior divisions; and services and equipment) when determining depreciation rates for the building assets The case study showed a misalignment of equivalent functional and financial depreciation rates used in the life-cycle management activities of the school building portfolio ranging between 1/1.26 for external elevations and roofs and 1/5.21 for landscaping.

Buildings initial technical and functional attributes are affected with its wear, aging or decay, causing loss of value until they reach end-of-life. This paper demonstrates the impact of the different interpretations of the concept of useful life and the subsequent misalignment that it generates between financial functions based on financial depreciation rates and non-financial functions based on historical data and the functional equivalent (technical and functional) depreciation rates. Economic data of 158 public school buildings constructed in Portugal since the 1940s, that sound life-cycle thinking enhances the alignment of both financial and non-financial functions.

This paper examines the optimal use of tax incentives relating to the Hawaii sales, use and excise tax. While many states offer exemptions to these taxes, Hawaii is the only known state that ties its excise tax credit to the depreciation method used on the state income tax return. Therefore, the purpose of this study is to use the Hawaii business tax context to illustrate the complex trade-offs and year-by-year analyses that small businesses often must employ in the presence of shifting federal tax policy that indirectly influences state tax structures because of tax coupling. Federal and Hawaii taxpayers can elect to expense depreciable property using the 179 expensing provision or to depreciate using the modified accelerated cost recovery system (MACRS). We develop a model that will help non-corporate small businesses in Hawaii determine their optimal tax cost recovery strategy: (1) Utilize Hawaii Section 179 immediate expensing on purchases of tangible personal property, or alternatively (2) Employ MACRS depreciation on these purchases combined with the Hawaii Capital Goods Excise Credit. Our modeling separately considers the possibility that the proprietor jointly makes the federal and Hawaii cost recovery decision, as well as the alternative possibility that these cost recovery decisions are made independently.

The study illustrates that the interaction of federal and state law differences exacerbated by frequent tax changes may cause significant tax compliance complexity and resulting confusion for small non-corporate business taxpayers who are generally not equipped to wrestle with such issues. From a policy perspective, states may wish to minimize complexity using coupling efforts with federal law or otherwise routinely revisit outdated state tax statutes that indirectly cause unintended tax consequences. States must be cognizant, however, that their own budget constraints may worsen if they fully couple with recent generous federal Section 179 expensing limits.

The paper aims to address concerns that valuers' choice of depreciation models in their cost approach to value is not sustainable (is incapable of preserving patronage in present and future generations).

The paper draws up conceptual expectations regarding how seven UK and US depreciation models pass or fail four identified sustainability indicators: reliability, consistency, usability and separate treatment of depreciation components. Valuation surveyors in Nigeria were offered as a case study of how valuers in one country respond to such conceptual investigations.

The study found that cross‐sectional models, the breakdown model and hedonic modeling are the depreciation models perceived as most sustainable. However, popular model use follows easiest models rather than most sustainable models.

The paper suggests that the pursuit of sustainability in valuation modeling should involve provision of institutionalized best practice guidance beyond that currently provided so as to assist valuers/appraisers in more sustainable choices.

The paper is probably the first to address both UK and US depreciation models and to assess each using defined sustainability criteria.

Aims to review accounting practice with regard to the calculation and attribution of technology costs (i.e. depreciation) to products, to evaluate the impact of expected depreciation charges on FCIM system investment, and to propose an alternative depreciation method that is congruent with FCIM resource consumption patterns and better enables rational managerial analysis of the FCIM system investment decision.

Reviews and extends existing models to propose a new model of cost accounting for rational FCIM investment analysis.

The proposed model better enables rational analysis of FCIM system investment options, resulting in a more accurate prediction of income and product line profitability attributable to FCIM system investment.

The logic embodied in this paper should be employed to further the development of more refined models of technology cost attribution. Simulations of machine use and maintenance by engineers, analogous to that presented in this paper, could provide a useful estimate of FCIM system exhaustion.

1.1 What Are Accounts For? Overview The purpose of accounts is to reveal performance in the conduct of a business or other activity concerned with use of economic resources (e.g. a club). It is thus a matter of stewardship. Although, like economics, it is necessary in accounting to use money as a measure of performance, it is concerned with the individual organisation rather than with economic phenomena as a whole.

As manufacturers continue to increase their level of automation, the issue of how to allocate machinery costs to products becomes increasingly important to product profitability. If machine costs are allocated to products on a basis that is incongruent with the realities of machine use, then income and product profitability will be distorted. Adding complexity to the dilemma of identifying an appropriate method of allocating machine costs to products is the changing nature of machinery itself. Depreciation concepts were formulated in days when a machine typically automated a single operation on a product. Today’s collections of computer numerically controlled machines can perform a wide variety of operations on products. Different products utilize different machine capabilities which, depending on the function used, put greater or less wear and tear on the equipment. This paper presents a mini-case that requires management accountants to consider alternative machine cost allocation methods. The implementation of an activity-based method allows managers to better match machine cost consumption to products. Better matching of machine costs to products enables better strategic decisions about pricing, mix, customer retention, capacity utilization, and equipment acquisition.

Preface The functions of business divide into several areas and the general focus of this book is on one of the most important although least understood of these—DISTRIBUTION. The particular focus is on reviewing current practice in distribution costing and on attempting to push the frontiers back a little by suggesting some new approaches to overcome previously defined shortcomings.