Comparing Three Depreciation Methods
Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3.
Required:
1.Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2 and Year 3 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 three years by each method.Round the answer for each year to the nearest whole dollar.
Depreciation Expense
|
Year
|
Straight-Line Method
|
Units-of-Activity Method
|
Double-Declining-Balance Method
|
Year 1 |
$fill in the blank 1 |
|
$fill in the blank 2 |
|
$fill in the blank 3 |
|
Year 2 |
fill in the blank 4 |
|
fill in the blank 5 |
|
fill in the blank 6 |
|
Year 3 |
fill in the blank 7 |
|
fill in the blank 8 |
|
fill in the blank 9 |
|
Total |
$fill in the blank 10 |
|
$fill in the blank 11 |
|
$fill in the blank 12 |
|
2.What method yields the highest depreciation expense for Year 1?
3.What method yields the most depreciation over the three-year life of the equipment?