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 7,200 hours during Year 1, 5,400 hours in Year 2, and 5,400 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three 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 three years by each method. Round the final answers for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units-of-Activity Method Double-Declining-Balance Method Year 1 $ 22,500 Year 2 22,500V Year 3 $ 22,500 Total S 67,500 $ 67,500 $ 67,500 2. What method yields the highest depreciation expense for Year 17 Double-declining-balance method v 3. What method yields the most depreciation over the three-year life of the equipment? All three depreciation methodsv

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Comparing three depreciation methods
Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected
have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,200 hours
during Year 1, 5,400 hours in Year 2, and 5,400 hours in Year 3.
Required:
1. Determine the amount of depreciation expense for the three 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 three years by each method. Round the final answers for each year to the nearest whole dollar.
Depreciation Expense
Year
Straight-Line Method
Units-of-Activity Method
Double-Declining-Balance Method
Year 1
$ 22,500 v
Year 2
22,500 V
Year 3
22,500
Total
$ 67,500
S 67,500
67,500
2. What method yields the highest depreciation expense for Year 1?
Double-declining-balance method v
3. What method yields the most depreciation over the three-year life of the equipment?
All three depreciation methods v
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Check My VWork
Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation.
Annual units-of-activity depreciation allocates the cost of the asset equally over the units produced (hours).
Transcribed Image Text:Dashboard * CengageNOWv2| Online teachin x m/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false h eBook Show Me How A Calculator Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,200 hours during Year 1, 5,400 hours in Year 2, and 5,400 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three 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 three years by each method. Round the final answers for each year to the nearest whole dollar. Depreciation Expense Year Straight-Line Method Units-of-Activity Method Double-Declining-Balance Method Year 1 $ 22,500 v Year 2 22,500 V Year 3 22,500 Total $ 67,500 S 67,500 67,500 2. What method yields the highest depreciation expense for Year 1? Double-declining-balance method v 3. What method yields the most depreciation over the three-year life of the equipment? All three depreciation methods v Feedback Check My VWork Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation. Annual units-of-activity depreciation allocates the cost of the asset equally over the units produced (hours).
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