Question :

The following is a note accompanying a current financial statement of International Paper Company:

Plant, equipment and properties are stated at cost less accumulated depreciation. Expenditures for betterments are capitalized, whereas normal maintenance and repairs are expensed as incurred. The units-of-production technique of depreciation is used for main pulp and paper mills, and the straight line technique is used for other plants and equipment. Yearly straight-line depreciation rates are, for buildings-2½ % to 8½ %, and for machinery andequipment-5 %to 33 %.

Instructions

a. Are the depreciation techniques used in the company's financial statements evaluated by existing income tax laws? If not, who is responsible for choosing these methods? Describe.