Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $883,000. The equipment...
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Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $883,000. The equipment was expected to have a useful life of four years, or 10,000 operating hours, and a residual value of $73,000. The equipment was used for 3,500 hours during Year 1, 2,100 hours in Year 2, 2,800 hours in Year 3, and 1,600 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 Year 1 Straight-Line Method Units-of-Activity Double-Declining- Method Balance Method $ 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? Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $883,000. The equipment was expected to have a useful life of four years, or 10,000 operating hours, and a residual value of $73,000. The equipment was used for 3,500 hours during Year 1, 2,100 hours in Year 2, 2,800 hours in Year 3, and 1,600 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 Year 1 Straight-Line Method Units-of-Activity Double-Declining- Method Balance Method $ 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?
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