Depreciation SchedulesDunn Corporation acquired a newr depreciable asset for $135,000. Theasset has a 5-year expected life and a residual value of zero. Required:1. Prepare a depreciation schedule for all 5 years of the asset’s expectedlife using the straight-line depreciation method.2. Prepare a depreciation schedule for all 5 years of the asset’s expectedlife using the double-declining-balance depreciation method.3. CONCEPTUAL CONNECTION What questions should be asked aboutthis asset to decide which depreciation method to use?

Answer with explanation:

Part 1. Straight-line depreciation can be calculated using the following formula:

Straight-line depreciation = (Cost of Asset - Residual Value) / Useful Life

Now by putting the values of each parameter, we have:

Straight-line depreciation = ($135,000 - Zero) / 5years = $27,000

So this depreciation will be charged to the asset to remainder of its life.

Part 2. We can calculate depreciation using double declining balance method whose formula is as under:

Double Declining Balance Depreciation = 2 X Cost of the asset/Useful Life

By putting values, we have:

Double Declining Balance Depreciation = 2 * $135,000 / 5 Years = $54,000

The depreciation would be charged each year unless it fells below the salvage value of the asset, which in this question is given and is zero.

Part 3.

Following are the main questions that we must consider before opting to any depreciation method:

So these were the factors which decides which method of depreciation must be opted or what estimate changes are required in calculating the fair value of the asset.

the answer would be voluntary exchange -

"the act of buyers and sellers freely and willingly engaging in market transactions. moreover, transactions are made in such a way that both the buyer and the seller are better off after the exchange than before it occurred."

hope this : )

-shy