How does consitency apply to depreciation?

Consistency in accounting for depreciation requires that a company applies the same depreciation method and estimates (such as useful life and residual value) over time. This ensures comparability of financial statements across periods, enabling stakeholders to assess the company’s financial performance accurately. If changes are necessary, they must be disclosed and justified to maintain transparency. Consistent application of depreciation helps in reflecting the true economic value of assets on the balance sheet.