Comparing Three Depreciation Methods

Dexter Industries purchased packaging equipment on January 8 for $612,200. The equipment was expected to have a useful life of four years, or 10,400 operating hours, and a residual value of $50,600. The equipment was used for 3,640 hours during Year 1, 2,184 hours in Year 2, 2,912 hours in Year 3, and 1,664 hours in Year 4.

Required:

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.

Depreciation Expense
Year	Straight-Line Method		Units-of-Activity Method		Double-Declining- Balance Method
Year 1
Year 2
Year 3
Year 4
Total

2. What method yields the highest depreciation expense for Year 1?

Straight-line methodUnits-of-activity methodDouble-declining-balance methodAll three depreciation methods

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

Straight-line methodUnits-of-activity methodDouble-declining-balance methodAll three depreciation methods