Comparing Depreciation Methods

Dexter Industries purchased packaging equipment on January 8 for 177,000. The equipment was expected to of years and value of four years, or 4,800 operating hours and a residual value of $14,600. The equipment was used for 1,680 hours during year 1, 1,008 hours in Year 2, 1,344 hours in year 3, 768 hours in year 4.

1. determine the amount of depreciation expense for the four years ending December 31 by (a) the straight line method, (b) the units of activity method, and (c) the double declining balance method. Also determine the total depreciation expense for the four years by each method. Round the answer for each year to the nearest whole dollar.

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1. What method yields the highest depreciation expense for year 1?

A. Straight line method

B. Units of activity method

C. Double declining balance method

D. All three depreciation methods

2. What method yields the most depreciation over the four year life of the equipment?

A. Straight line method

B. Units of activity method

C. Double declining balance method

D. All three depreciation methods

Depreciation Expense Units-of-Activity Straight-Line Method Method Year Double-Declining- Balance Method Year 1 Year 2 Year 3 Year 4 Total 2. What method yields the highest depreciation expense for Year 1? 3. What method yields the most depreciation over the four-year life of the equipment