Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $282,600. The equipment...

Transcribed Image Text:

Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $282,600. The equipment was expected to have a useful life of four years, or 9,600 operating hours, and a residual value of $23,400. The equipment was used for 3,360 hours during Year 1, 2,016 hours in Year 2, 2,688 hours in Year 3, and 1,536 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the four 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 four years by each method. 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 3 Year 4 Total 2. What method yields the highest depreciation expense for Year 1? Double-declining-balance method 3. What method yields the most depreciation over the four-year life of the equipment? All three depreciation methods Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $282,600. The equipment was expected to have a useful life of four years, or 9,600 operating hours, and a residual value of $23,400. The equipment was used for 3,360 hours during Year 1, 2,016 hours in Year 2, 2,688 hours in Year 3, and 1,536 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the four 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 four years by each method. 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 3 Year 4 Total 2. What method yields the highest depreciation expense for Year 1? Double-declining-balance method 3. What method yields the most depreciation over the four-year life of the equipment? All three depreciation methods