Comparing Three Depreciation Methods

Waylander Coatings Company purchased waterproofing equipment on January 6 for $418,600. The equipment was expected to have a useful life of four years, or 9,600 operating hours, and a residual value of $34,600. The equipment was used for 3,600 hours during Year 1, 3,000 hours in Year 2, 1,700 hours in Year 3, and 1,300 hours in Year 4.

Required:

1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, 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. Note: 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?

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

Depreciation by Three Methods; Partial Years

Layton Company purchased tool sharpening equipment on October 1 for $49,950. The equipment was expected to have a useful life of three years or 4,860 operating hours, and a residual value of $1,350. The equipment was used for 900 hours during Year 1, 1,700 hours in Year 2, 1,500 hours in Year 3, and 760 hours in Year 4.

Required:

Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

a. Straight-line method

Year	Amount
Year 1	$fill in the blank 1
Year 2	$fill in the blank 2
Year 3	$fill in the blank 3
Year 4	$fill in the blank 4

b. Units-of-activity method

Year	Amount
Year 1	$fill in the blank 5
Year 2	$fill in the blank 6
Year 3	$fill in the blank 7
Year 4	$fill in the blank 8

c. Double-declining-balance method

Year	Amount
Year 1	$fill in the blank 9
Year 2	$fill in the blank 10
Year 3	$fill in the blank 11
Year 4	$fill in the blank 12

Amortization and Depletion Entries

Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

1. On December 31, the company determined that $1,240,000 of goodwill was impaired.
2. Governmental and legal costs of $8,360,000 were incurred on September 30 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for one-fourth of a year.
3. Timber rights on a tract of land were purchased for $1,540,000 on February 4. The stand of timber is estimated at 7,000,000 board feet. During the current year, 1,900,000 board feet of timber were cut and sold.

Required:

1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. Do not round your intermediate calculation.

Item	Impairment, Amortization or Depletion Expense
a.	$fill in the blank 35948503ef89f8d_1
b.	$fill in the blank 35948503ef89f8d_2
c.	$fill in the blank 35948503ef89f8d_3

2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item.

a.		fill in the blank f689a8fbc058fc0_2	fill in the blank f689a8fbc058fc0_3
		fill in the blank f689a8fbc058fc0_5	fill in the blank f689a8fbc058fc0_6
b.		fill in the blank f689a8fbc058fc0_8	fill in the blank f689a8fbc058fc0_9
		fill in the blank f689a8fbc058fc0_11	fill in the blank f689a8fbc058fc0_12
c.		fill in the blank f689a8fbc058fc0_14	fill in the blank f689a8fbc058fc0_15
		fill in the blank f689a8fbc058fc0_17	fill in the blank f689a8fbc058fc0_18