Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $86,400. The equipment was expected to have a useful life of 3 years, or 21,600 operating hours, and a residual value of $5,400. The equipment was used for 8,640 hours during Year 1, 6,480 hours in Year 2, and 6,480 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the 3 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 3 years by each method. Do not round intermediate calculations when determining the depreciation rate. Round the final answers for each year to the nearest whole dollar. Straight-Line Method Depreciation Expense Method Balance Method Units-of-Activity Double-Declining- Year Year 1 > Year 2 Year 3 Total 2. What method yields the highest depreciation expense for Year 1? $ 3. What method yields the most depreciation over the 3-year life of the equipment? D

Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $86,400. The equipment was expected to have a useful life of 3 years, or 21,600 operating hours, and a residual value of $5,400. The equipment was used for 8,640 hours during Year 1, 6,480 hours in Year 2, and 6,480 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the 3 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 3 years by each method. Do not round intermediate calculations when determining the depreciation rate. Round the final answers for each year to the nearest whole dollar. Straight-Line Method Depreciation Expense Method Balance Method Units-of-Activity Double-Declining- Year Year 1 > Year 2 Year 3 Total 2. What method yields the highest depreciation expense for Year 1? $ 3. What method yields the most depreciation over the 3-year life of the equipment? D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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