CHAPTER 10 HW: Q2

Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $597,200. The equipment was expected to have a useful life of three years, or 6,600 operating hours, and a residual value of $49,400. The equipment was used for 2.640 hours during year 1, 2,046 hours in Year 2, and 1,914 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three years ending December 31, Year 1 Year 2 Year 3, by (a) the straight line method, (b) the units of activity method, and (c) the double dedining balance method. Also determine the total deprecation expense for the three years by each method. Note: For all methods, round the answer for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units of Activity Method Double-Declining Balance Method Year 1 Year 2 Year Total 2. What method vields the highest depreciation expense for Year 17 3. What method yields the most depreciation over the three-year life of the equipment