PR $9-2$B Comparing Three Depreciation Methods

Obj. $2$

Waylander Coatings Company purchased waterproofing equipment on January $6$ for $$320,000.$ The equipment was expected to have a useful life of $4$ years, or $20,000$ operating hours, and a residual value of $$35,000.$ The equipment was used for $7,200$ hours during Year $1,6,400$ hours in Year $2,4,400$ hours in Year $3,$ and $2,000$ hours in Year $4.$

INSTRUCTIONS

Determine the amount of depreciation expense for the years ended December $31,$ Year $1,$ Year $2,$ Year $3,$ and Year $4,$ 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 $4$ years by each method. The following columnar headings are suggested for recording the depreciation expense amounts:

$\backslash$table$[[,$Depreciation Expense$],[$Year$,\backslash$table$[[$Straight$-$Line$],[$Method$]],\backslash$table$[[$Units$-$of$-],[$Activity$],[$Method$]],\backslash$table$[[$Double$-],[$Declining$-],[$Balance$],[$Method$]]],[,,]]$

What method yields the highest depreciation expense for Year $1?$

What method yields the most depreciation over the $4-$year life of the equipment?