Lambert Company purchased an asset for $ 525,000. It has an expected useful life of 10 years and no salvage value. Lambert uses the double-declining-balance depreciation method.
Required:
Use a computer spreadsheet package.
A. Prepare a schedule that indicates the depreciation expense, ending balance of accumulated depreciation, and ending book value of each year of the asset’s life. (Do not be alarmed if you still have a book value at the end of 10 years.)
B. Because double- declining- balance does not balance to zero, particularly when the cost of the asset is high and the salvage value is low, companies often switch to straight- line depreciation sometime during the life of the asset. Determine when Lambert should switch to the straight- line method and prepare a schedule as indicated in part (A).