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Montes Coffee Company purchased packaging equipment on January 5, 2014, for $105,200. The equipment was expected to have a useful life of three years, or
Montes Coffee Company purchased packaging equipment on January 5, 2014, for $105,200. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $7,200. The equipment was used for 8,520 hours during 2014, 6,940 hours in 2015, and 4,540 hours in 2016.
1. | Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, and 2016 by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each 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.) |
2. | What method yields the highest depreciation expense for 2014? |
3. | What method yields the most depreciation over the three-year life of the equipment? |
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