1. Using the Schedule of Equipment and Leasehold Improvements and the Depreciation Schedule, analyze the reasonableness of the depreciation expense for each fixed-asset category on a yearly basis and explain your findings. Assume fixed assets have a 5-year life and a mid-year purchase date.

2. Based on your conclusions regarding equipment, which fraud scheme(s) might cause this activity and what additional procedures might you perform?

3. Based on your conclusions regarding leasehold improvements, which fraud scheme(s) might cause this activity and what additional procedures might you perform?

H 1 K 0 Q R L M N Depreciation Schedule 20X1 Ending Balance Beginning Balance Additions Ending Balance Retirements 741.340 158,986 Equipment 185,696 Leasehold Improven 24,668 84 325 19.768 14.500 255,521 44 436 900.326 210,364 104.093 14.500 299.957 20X2 Ending Balance Beginning Balance Ending Balance Additions Retirements B D E F G 1 Schedule of Equipment and Leasehold Improvements 2 3 4 20X1 5 Beginning 6 Balance Additions Retirements 7 8 Equipment 626.510 131.440 16,610 9 Leasehold Improvements 143,421 15.565 10 11 769,931 147,005 16,610 12 13 14 15 20X2 16 Beginning 17 Balance Additions Retirements 18 19 Equipment 741,340 307,790 40,602 20 Leasehold Improvements 158,986 46.885 21 22 900 326 354.675 40,602 23 24 25 26 20X3 27 Beginning 28 Balance Additions Retirements 29 30 Equipment 1,097,528 6,953, 306 125,864 31 Leasehold Improvements 205,871 135.642 32 33 1,303.399 7,088.948 125.864 34 35 36. 35.101 1,097,528 205,871 Equipment 255,521 Leasehold Improver 44,436 105.718 23. 144 326 138 67.580 1,303.399 299,957 128.862 35.101 393.718 20X3 Ending Balance Beginning Balance Additions Ending Balance Retirements 109.875 7,924.970 341,513 Equipment 326,138 Leasehold Improven 67,580 1,024,587 17,828 1.240.850 85 408 8,266.483 393,718 1,042.415 109.875 1,326 258 H 1 K 0 Q R L M N Depreciation Schedule 20X1 Ending Balance Beginning Balance Additions Ending Balance Retirements 741.340 158,986 Equipment 185,696 Leasehold Improven 24,668 84 325 19.768 14.500 255,521 44 436 900.326 210,364 104.093 14.500 299.957 20X2 Ending Balance Beginning Balance Ending Balance Additions Retirements B D E F G 1 Schedule of Equipment and Leasehold Improvements 2 3 4 20X1 5 Beginning 6 Balance Additions Retirements 7 8 Equipment 626.510 131.440 16,610 9 Leasehold Improvements 143,421 15.565 10 11 769,931 147,005 16,610 12 13 14 15 20X2 16 Beginning 17 Balance Additions Retirements 18 19 Equipment 741,340 307,790 40,602 20 Leasehold Improvements 158,986 46.885 21 22 900 326 354.675 40,602 23 24 25 26 20X3 27 Beginning 28 Balance Additions Retirements 29 30 Equipment 1,097,528 6,953, 306 125,864 31 Leasehold Improvements 205,871 135.642 32 33 1,303.399 7,088.948 125.864 34 35 36. 35.101 1,097,528 205,871 Equipment 255,521 Leasehold Improver 44,436 105.718 23. 144 326 138 67.580 1,303.399 299,957 128.862 35.101 393.718 20X3 Ending Balance Beginning Balance Additions Ending Balance Retirements 109.875 7,924.970 341,513 Equipment 326,138 Leasehold Improven 67,580 1,024,587 17,828 1.240.850 85 408 8,266.483 393,718 1,042.415 109.875 1,326 258