In a recent study about the harmonization of accountingpractices in different countries, researchers studied the extent towhich accounting practices in three European countries, France,Germany, and the UK are harmonized. They considered three differentdepreciation methods - the straight line method (S), the decliningbalance method (D), and a combination of the S and D methods (S_D)- and recorded the depreciation methods of 78 randomly selectedFrench, German, and UK firms. These data are summarised in thefollowing contingency table:
In A Recent Study About The Harmonization Of Accounting Practices In Different Countries Researchers Studied The Extent 1 (422.57 KiB) Viewed 87 times
(a) Using this contingency table, is it possible to infer at the1% significance level that the depreciation method is independentof a firm's location (i.e., country)? To answer this question,select the most appropriate test procedure and explain your choice.State your hypotheses and your decision rule, calculate the teststatistic manually showing the details of your calculations, make astatistical decision based on the appropriate critical value, anddraw your conclusion.
(b) What requirements must be met to validate the test you havejust performed? Are they satisfied? If not, what does thismean?
Please provide detailed steps and please manually calculate theanswer as required in the question.
Method S D SD Country France Germany 15 1 10 0 1 25 UK 25 1 0
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