PR 9-3A Depreciation by three methods; partial years OBJ. 2 Perdue Company purchased equipment on April 1, 2014, 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 2014, 5,500 hours in 2015. 4.000 hours in 2016 and 1,000 hours in 2017 Instructions Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, 2016, and 2017. by (a) the straight-line method, (b) the units-of-output method, and (c) the double declining-balance method. Depreciation Expense Straight- Line Units of Production Double Declining- Balance 2014 65.250 87 000 108,750 79.750 90,000 30,000 2015 87.000 2016 2017 Totals 21,750 201.000 261.000 Calculations Straight-line method: For full year: Cost - Residual Value) 270.000 $ 9,000 - Yearly Depreciation $ 87,000 $ For part years: 2014 Depreciation $ 270,000 Portion of Year Depreciation 2017 Depreciation x Portion of Year Depreciation Units-of-production method: Residual Value) Total Hours Rats 2014 $86.66 Hours 7.500 5.500 Yearly Depreciation 108,750 79.750 58,000 14.500 2015 2016 2017 4,000 1000 Yearly Portion of Year Depreciation Double-declining-balance method: Depreciable Balance 2014 $ 270,000 2015 2016 Since depreciation cannot cause book value to fall below residual value Depreciable Balance Residual Value - Yearly Depreciation 14,500 2017