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SSC Financial and Cost Accounting P-1 QUESTION #1197
Question 1
If two companies use different depreciation methods, the comparability of their financial information may be compromised unless:
  • The companies belong to the same regulatory framework.
  • They operate in similar markets.
  • The companies use IFRS standards.
  • Full disclosure of the methods is provided.✔️
Correct Answer Explanation
Comparability requires that users can identify and understand similarities and differences between entities. When different accounting methods are used, comparability is preserved if the entity fully discloses the method used, enabling users to adjust and compare. Full disclosure (in notes to financial statements) is the key safeguard.