Dexter Industries purchased packaging equipment on January 8 for $81,900. The equipment was expected to have a useful life of 3 years, or 20,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 6,400 hours in Year 3.

INSTRUCTIONS

1. Determine the amount of depreciation expense for the three 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 3 years by each method.

2. What method yields the highest depreciation expense for year 1?

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