When does the Depreciation Projection distribution begin and how is the process described?

When does the Depreciation Projection distribution begin and how is the process described?

• A. It begins shortly after the time of the initial department submissions; Projections are provided on a preliminary basis and are refined through the planning period up to the point when final department capital budgets have been determined.
• B. It begins after final budgets are set; Projections are fixed.
• C. It begins at year-end; Projections are speculative only.
• D. It starts before department submissions; no refinement.

Answer: (A)

Depreciation projections are part of the budgeting process and need to evolve as plans firm up. They should be released early, giving departments a first look to plan around, and then be refined as more detail becomes available. This starts shortly after the initial department submissions and the projections are provided on a preliminary basis, with further adjustments made throughout the planning period until the final department capital budgets are determined. Waiting until budgets are final would lock in numbers too late for planning, and starting before submissions or not refining would ignore the changing information that affects asset purchases, disposals, and financing.

Depreciation projections are part of the budgeting process and need to evolve as plans firm up. They should be released early, giving departments a first look to plan around, and then be refined as more detail becomes available. This starts shortly after the initial department submissions and the projections are provided on a preliminary basis, with further adjustments made throughout the planning period until the final department capital budgets are determined. Waiting until budgets are final would lock in numbers too late for planning, and starting before submissions or not refining would ignore the changing information that affects asset purchases, disposals, and financing.