a. Depreciation Expense b. Straight- Units-of- Line Activity c. Double-Declining- Balance Year 1 2 3 Totals Calculations: Straight-line method: (Cost Residual Value) Years Yearly Depreciation Units-of-activity method: (Cost Residual Value) 1 Total Hours Rate Rate Hours Yearly Depreciation Year 1 Year 2 Year 3 Double-declining balance method: Depreciable Balance Rate Yearly Depreciation Year 1 Year 2 Since depreciation cannot cause book value to fall below residual value: Depreciable Balance Residual Value Yearly Depreciation Year 3 PR 9-2A Comparing Three Depreciation Methods Obj. 2 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. Instructions 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. The following columnar headings are suggested for recording the depreciation expense amounts: Depreciation Expense Year Straight-Line Units-of- Double-Declining. Method Activity Balance Method Method Answer + Check Figure: a. Year 1: straightline depreciation, $22,500 2. What method yields the highest depreciation expense for Year 1? 3. What method yields the most depreciation over the three-year life of the equipment