Comparing Three Depreciation Methods

Dexter Industries purchased packaging equipment on January 8 for $796,600. The equipment was expected to have a useful life of four years, or 8,400 operating hours, and a residual value of $65,800. The equipment was used for 2,940 hours during Year 1, 1,764 hours in Year 2, 2,352 hours in Year 3, and 1,344 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.

Comparing Three Depreciation Methods Required: 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