Hi All

I am having difficulties answering an essay question. The topic is Depreciation and Sale of Assets.

If anyone can help, it would be great!

Thanks!

-----------------------------------------------------------------------------

"Depreciation methods at best are an attempt to estimate the amount a fixed asset will contribute to annual revenue."

Discuss this statement and make reference to the common misunderstanding that depreciation some how provides cash for future asset replacement. How can profit be made upon the sale of an asset if no cash is set aside?