Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 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 4,400 hours in Year 3.
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 three years by each method. (Note: For DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar.)
Depreciation Expense
1
Year
Straight-Line Method
Units-of-Activity Method
Double-Declining-Balance Method
2
Year 1
3
Year 2
4
Year 3
5
Total
2. What method yields the highest depreciation expense for Year 1?
Straight-line method
Units-of-output method
Double-declining-balance method
All three depreciation methods
3. What method yields the most depreciation over the three-year life of the equipment?
Straight-line method
Units-of-output method
Double-declining-balance method
All three depreciation methods
Answers: 2
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Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected...
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