Question
Waldum Company purchased packaging equipment on January 5, 2012, for $135,000. The equipment was expected to have a useful life of three years, or 18,000
Waldum Company purchased packaging equipment on January 5, 2012, for $135,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual valueof $13,500. The equipment was used for 8,600 hours during 2012, 5,300 hours in 2013, and 4,100 hours in 2014.
Required:
1. Determine the amount of depreciation expense for the years ended December 31, 2012, 2013, and 2014, by (a) the straight-line method, (b) 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.
Depreciation Expense | ||||||
---|---|---|---|---|---|---|
Year | Straight-Line Method | Units-of-Output Method | Double-Declining-Balance Method | |||
2012 | $ | $ | $ | |||
2013 | $ | $ | $ | |||
2014 | $ | $ | $ | |||
Total | $ | $ | $ |
2. What method yields the highest depreciation expense for 2012? SelectStraight-line methodUnits-of-output methodDouble-declining-balance methodAll three depreciation methodsItem 13
3. What method yields the most depreciation over the three-year life of the equipment? SelectStraight-line methodUnits-of-output methodDouble-declining-balance methodAll three depreciation methodsItem 14
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