Final answer:
The depreciation expense of an asset does not change due to regular repairs and maintenance as they do not significantly affect the asset's value or prolong its useful life. In currency markets, expected depreciation in a currency like the pound leads to an increase in its supply, a decrease in demand, and a reduction in its value against currencies like the dollar. Emphasis on product longevity also increases the value placed on craftsmanship and quality goods.
Step-by-step explanation:
The depreciation expense of an asset can change for several reasons, but not all are applicable. To clarify, depreciation expense can be affected by changes in the asset's expected residual value (A) or changes in the asset's expected useful life (B). However, it will not change due to an increase in the asset resulting from regular repairs and maintenance (D) because these expenses typically do not extend the useful life of the asset significantly nor increase its residual value; these costs are rather expensed in the period they occur. Major repairs (C) might enhance the asset's value or extend its useful life, and could indeed affect the depreciation calculation.
Regarding currency markets, expected depreciation in a currency, like the pound, can cause an increase in supply and a decrease in demand for that currency, resulting in a decrease in value against another currency, such as the dollar. Similarly, lower U.S. interest rates can reduce the demand for dollars and increase its supply, leading to a depreciation against another currency like the euro. If a country's inflation rate drops relative to others, there will likely be an increase in demand and a decrease in supply for its currency, strengthening its value in foreign currency markets. When we think of the environmental and economic impacts of disposing of goods versus repairing them, we see a push for longevity in products and a higher valuation for craftsmanship and quality goods