At the beginning of 2006, Precision Manufacturing purchased a new computerized drill press for \($50,000\) . It is expected to have a five-year life and a \($5,000\) salvage value.

Required:

a. Compute the depreciation for each of the five years, assuming that the company uses (1) Straight-line depreciation.
(2) Double-declining-balance depreciation.

b. Record the purchase of the drill press and the depreciation expense for the first year under the straight-line and double-declining-balance methods in a financial statements model like the following one:

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Assets Equity Rev. - Exp. = Net Inc. Cash Flow Cash + Drill Press Acc. Dep. Ret. Earn