Question
Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $599,600. The equipment was expected to have a useful life of four
Comparing Three Depreciation Methods
Dexter Industries purchased packaging equipment on January 8 for $599,600. The equipment was expected to have a useful life of four years, or 10,000 operating hours, and a residual value of $49,600. 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 | Straight-Line Method | Units-of-Activity Method | Double-Declining- Balance Method | |||
Year 1 | $fill in the blank 1 | $fill in the blank 2 | $fill in the blank 3 | |||
Year 2 | $fill in the blank 4 | $fill in the blank 5 | $fill in the blank 6 | |||
Year 3 | $fill in the blank 7 | $fill in the blank 8 | $fill in the blank 9 | |||
Year 4 | $fill in the blank 10 | $fill in the blank 11 | $fill in the blank 12 | |||
Total | $fill in the blank 13 | $fill in the blank 14 | $fill in the blank 15 |
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
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