Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $970,200. The equipment was expected to have a useful life of four years, or 10,000 operating hours, and a residual value of $80,200. The equipment was used for 3,500 hours during Year 1, 2,100 hours in Year 2, 2,800 hours in Year 3, and 1,600 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. Year Year 1 Year 2 Year 3 Year 4 Depreciation Expense Total Straight-Line Method 222,500 222,500 222,500 222,500 890,000 2. What method yields the highest depreciation expense for Year 1? Units-of-Activity Method $ $ $ 311,500 186,900 249,200 142,400 890,000 $ Double-Declining- Balance Method 3. What method yields the most depreciation over the four-year life of the equipment? $ 485,100 242,550 121,275 60,638

Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $970,200. The equipment was expected to have a useful life of four years, or 10,000 operating hours, and a residual value of $80,200. The equipment was used for 3,500 hours during Year 1, 2,100 hours in Year 2, 2,800 hours in Year 3, and 1,600 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. Year Year 1 Year 2 Year 3 Year 4 Depreciation Expense Total Straight-Line Method 222,500 222,500 222,500 222,500 890,000 2. What method yields the highest depreciation expense for Year 1? Units-of-Activity Method $ $ $ 311,500 186,900 249,200 142,400 890,000 $ Double-Declining- Balance Method 3. What method yields the most depreciation over the four-year life of the equipment? $ 485,100 242,550 121,275 60,638

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Description: Comparing Three Depreciation MethodsDexter Industries purchased packaging equipment on January 8 for $970,200. The equipment was expected to have a useful life of four years, or 10,000operating hours, and a residual value of $80,200. The equipment w

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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