Depreciation by Three Methods Partial Years Perdue Company purchased equipment on April 1 for $64,260 The equipment was expected to have a useful life of three years, or 5,940 operating hours, and a residual value of $1,890 The equipment was used for 1,100 hours during Year 1, 2,100 hours in Year 2, 1,800 hours in Year 3, and 940 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) 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 $ Year 2 $ Year 3 $ Year 4 $ b Units of activity method Year Amount Year 1 $ Year 2 $ Year 3 $ Year 4 $ c Double declining balance method Year Amount Year 1 $ Year 2 $ Year 3 $ Year 4 $ Feedback a Asset cost minus residual value equals depreciable cost Sum the yearly depreciation to determine total depreciation b Annual units of activity depreciation allocates the cost of the asset equally over the units produced (hours) c The double declining rate is two times the straight line rate Book value is the asset cost minus accumulated depreciation Compare the total depreciation for all methods over the time period Recall that straight line depreciation allocates the depreciable cost of the asset equally over the period of use, while double declining method is an accelerated method

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Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $64,260. The equipment was expected to have a useful life of

Depreciation by Three Methods; Partial Years

Perdue Company purchased equipment on April 1 for $64,260. The equipment was expected to have a useful life of three years, or 5,940 operating hours, and a residual value of $1,890. The equipment was used for 1,100 hours during Year 1, 2,100 hours in Year 2, 1,800 hours in Year 3, and 940 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) 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	$
Year 2	$
Year 3	$
Year 4	$

b. Units-of-activity method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

c. Double-declining-balance method

Year	Amount
Year 1	$
Year 2	$
Year 3	$
Year 4	$

Feedback

a. Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation.

b. Annual units-of-activity depreciation allocates the cost of the asset equally over the units produced (hours).

c. The double-declining rate is two times the straight-line rate. Book value is the asset cost minus accumulated depreciation.

Compare the total depreciation for all methods over the time period. Recall that straight-line depreciation allocates the depreciable cost of the asset equally over the period of use, while double-declining method is an accelerated method.