Question 476912: In recent years major efforts have been made to standardize accounting practices in different countries; this is called harmonization. In an article in Accounting and Business Research, Emmanuel N. Emenyonu and Sidney J. Gray studied the extent to which accounting practices in France, Germany, and the UK are harmonized.
a. Depreciation method is one of the accounting practices studied by Emenyonu and Gray. Three methods were considered-the straight-line method (S), the declining balance method (D), and a combination of D & S (sometime European firms start with the declining balance method and then switch over to the straight-line method when the figure derived from straight line exceeds that from declining balance). The data in Table 12.5 summarize the depreciation methods used by a sample of 78 of France, Germany, and UK firms. Use these data and the results of the chi-square analysis in Table 12.5 to test the hypothesis that depreciation method is independent of a firm’s location (country) at the .05 level of significance.
Found 2 solutions by robertb, lahank1886:
Answer by robertb(5830)   (Show Source):
Answer by lahank1886(3)  (Show Source):
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So from calculation table, we got chi-square statistics=50.893, the corresponding p-value=0.0000 (check with degree freedom (3-1)*(3-1)=4). Since p-value is less than significant level 0.05, we can reject null hypothesis because there is a relationship between the two variables.
Conclusion: depreciation method is not independent of a firm’s location.
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