Comparing three depreciation methods

Dexter Industries purchased packaging equipment on January 8 for $86,400. The equipment was expected to have a useful life of 3 years, or 21,600 operating hours, and a residual value of $5,400. The equipment was used for 8,640 hours during Year 1, 6,480 hours in Year 2, and 6,480 hours in Year 3.

Required:

1. Determine the amount of depreciation expense for the 3 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 3 years by each method. Do not round intermediate calculations when determining the depreciation rate. Round the final answers for each year to the nearest whole dollar.

Year	Straight-Line Method	Units-of-Activity Method	Double-Declining- Balance Method
Year 1	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Year 2	fill in the blank 4	fill in the blank 5	fill in the blank 6
Year 3	fill in the blank 7	fill in the blank 8	fill in the blank 9
Total	$fill in the blank 10	$fill in the blank 11	$fill in the blank 12

2. What method yields the highest depreciation expense for Year 1?

Straight-line methodUnits-of-activity methodDouble-declining-balance methodAll three depreciation methodsDouble-declining-balance method

3. What method yields the most depreciation over the 3-year life of the equipment?

Straight-line methodUnits-of-activity methodDouble-declining-balance methodAll three depreciation methods