Air Pack Company purchased packaging equipment on January 3, 2006, for $90,000. The equipment was expected to have a useful life of three years, or 21,000 operating hours, and a residual value of $6,000. The equipment was used for 8,000 hours during 2006, 7,500 hours in 2007, and 5,500 hours in 2008.

Instructions

Determine the amount of depreciation expense for the years ended December 31, 2006, 2007, and 2008, by

(a) The straight-line method,

(b) The units-of-production method,

(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 expenseamounts:

Transcribed Image Text:

Depreciation Expense Straight-Units-ofDouble-Declining- Production Method Line Year Method Method