Comparing Three Depreciation Methods
Waylander Coatings Company purchased waterproofing equipment on January 6 for $889,400. The equipment was expected to have a useful life of four years, or 9,600 operating hours, and a residual value of $73,400. The equipment was used for 3,600 hours during Year 1, 3,000 hours in Year 2, 1,700 hours in Year 3, and 1,300 hours in Year 4.
Required:
1.Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method.
Note: Round the answer for each year to the nearest whole dollar.
Depreciation Expense
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Year
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Straight-Line Method
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Units-of-Activity Method
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Double-Declining-Balance Method
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Year 1 |
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$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 |
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$fill in the blank 4 |
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$fill in the blank 5 |
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$fill in the blank 6 |
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Year 3 |
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$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 |
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$fill in the blank 10 |
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$fill in the blank 11 |
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$fill in the blank 12 |
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Total |
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$fill in the blank 13 |
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$fill in the blank 14 |
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$fill in the blank 15 |
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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?