PR 9-3A Depreciation by three methods; partial years EXCEL TEMPLATE Obj. 2 Perdue Company purchased equipment on April 1 for $270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 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. Answer A. Straight- Line Depreciation Expense B. Units-of- Activity C. Double-Declining- Balance Year 1 2 3 4 Totals Calculations: Straight-line method: For full year: (Cost Residual Value Years Yearly Depreciation For part years: Year 1 Depreciation x Portion of Year - Depreciation Year 4 Depreciation x Portion of Year - Depreciation Units-of-activity method: (Cost Residual Value 1 Total Hours Rate Rate x Hours Yearly Depreciation Year 1 Year 2 Year 3 Year 4 Rate Double-declining balance method: Depreciable Yearly Balance Portion of Year - Depreciation Year 1 Year 2 Year 3 Since depreciation cannot cause book value to fall below residual value: Depreciable Residual Balance Value Yearly Depreciation Year 4