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 4,800 operating hours, and a residual value of $23,400. The equipment was used for 1,680 hours during Year 1, 1,008 hours in Year 2, 1,344 hours in Year 3, and 768 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
|
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Units-of-Activity Method
|
|
Double-Declining-
Balance Method
|
Year 1 |
$fill in the blank 1 |
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$fill in the blank 2 |
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$fill in the blank 3 |
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Year 2 |
$fill in the blank 4 |
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$fill in the blank 5 |
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$fill in the blank 6 |
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Year 3 |
$fill in the blank 7 |
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$fill in the blank 8 |
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$fill in the blank 9 |
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Year 4 |
$fill in the blank 10 |
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$fill in the blank 11 |
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$fill in the blank 12 |
Total |
$fill in the blank 13 |
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$fill in the blank 14 |
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$fill in the blank 15 |
2.What method yields the highest depreciation expense for Year 1?
3.What method yields the most depreciation over the four-year life of the equipment?