Plum Coatings Company purchased waterproofing equipment on January 2, 2011, for $450,000. The equipment was expected to have a useful life of four years, or 10,000 operating hours, and a residual value of $50,000. The equipment was used for 3,000 hours during 2011, 4,000 hours in 2012, 2,500 hours in 2013, and 500 hours in 2014.

Instructions
1. Determine the amount of depreciation expense for the years ended December 31, 2011, 2012, 2013, and 2014, by
(a) The straight-line method,
(b) The units-of-production method, and
(c) The double-declining-balance method. Also determine the total depreciation expense for the four years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:

2. What method yields the highest depreciation expense for 2011?
3. What method yields the most depreciation over the four-year life of theequipment?

Transcribed Image Text:

Straight Line Method Units-of- Production Method Double-Declining Balance Method Year