OBJ. 2 V1.a. 2014: straight- line depreciation, $28,000 PR 10-2A Comparing three depreciation methods Monte's Coffee Company purchased packaging equipment on January 5, 2014, for $90,000. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,000. The equipment was used for 8,900 hours during 2014, 7,100 hours in 2015, and 4,000 hours in 2016. Instructions 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. The following columnar headings are suggested for recording the depreciation expense amounts: SHOW ME HOW Straight- Line Method Depreciation Expense Units-of- Double-Declining Output Balance Method Method Year Va. 2014: 565,250 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? PR 10-3A Depreciation by three methods; partial years OBJ. 2 Perdue Company purchased equipment on April 1, 2014, for $270,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during 2014, 5,500 hours in 2015, 4,000 hours in 2016, and 1,000 hours in 2017. Instructions Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, 2016, and 2017, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. K 1. Depreciation Expense a. b. Straight- Units of Une Production c. Double-Declining Balance Year 2014 2015 2016 Totals 3 + Calculations: Straight-line method: (Cost Residual Value) B Years Yearly Depreciation Units-of-production method: (Cost - Residual Value) Total Hours Rate Rate Hours Yearly Depreciation 2014 2015 2016 D 1 2 3 -4 5 6 -7 8 19 10 11 2 53 14 15 46 7 48 49 50 51 52 Yearly Depreciation Double-declining balance method: Depreciable Balance Rato 2014 2015 Since depreciation cannot cause book value to fall below residual value: Depreciable Balance Residual Value 2016 Yearly Depreciation 2. The method that yields the most depreciation expense in 2014 is the 54 55 56 57 58 59 60 3. The method that yields the most total depreciation over the three years is the