Reference no: EM132559703

Question - On January 1, 2020, XYZ Company bought a new, $1,000,000 mainframe computer. Because of rapid changes in technology and XYZ's plans for growth, the computer has only a five-year useful life and no salvage value. The chief financial officer for XYZ has decided that the company should depreciate the computer using the straight-line method rather than the double-declining balance method.

Required -

a) Calculate depreciation expense for 2020 using the straight-line method.

b) Calculate depreciation expense for 2020 using the double-declining balance method.

c) What would the difference be in 2020 net income for XYZ if it chooses the straight-line method rather than double-declining balance?

d) Is it ethical for the chief financial officer to choose the straight-line method?

e) Prepare report on all depreciation method and select one depreciation method and explain with example why this method should be used and reasons why other depreciation methods are not a good choice. In your justification should explain the effect on profit and expenses.