Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $259,400. The equipment was expected to have a useful life of four years, or 6,800 operating hours, and a residual value of $21,400. The equipment was used for 2,380 hours during Year 1, 1,428 hours in Year 2, 1,904 hours in Year 3, and 1,088 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. Depreciation Expense Units-of-Activity Method $fill in the blank 2 Year Straight-Line Method Year 1 $fill in the blank 1 Year 2 $fill in the blank 4 $fill in the blank 5 Year 3 $fill in the blank 7 $fill in the blank 8 Year 4 $fill in the blank 10 $fill in the blank 11 Total $fill in the blank 13 $fill in the blank 14 Double-Declining- Balance Method $fill in the blank 3 $fill in the blank 6 $fill in the blank 9 $fill in the blank 12 $fill in the blank 15 2. What method yields the highest depreciation expense for Year 1? Straight-line methodUnits-of-activity method Double-declining-balance methodAll three depreciation methods 3. What method yields the most depreciation over the four-year life of the equipment?
Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $259,400. The equipment was expected to have a useful life of four years, or 6,800 operating hours, and a residual value of $21,400. The equipment was used for 2,380 hours during Year 1, 1,428 hours in Year 2, 1,904 hours in Year 3, and 1,088 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. Depreciation Expense Units-of-Activity Method $fill in the blank 2 Year Straight-Line Method Year 1 $fill in the blank 1 Year 2 $fill in the blank 4 $fill in the blank 5 Year 3 $fill in the blank 7 $fill in the blank 8 Year 4 $fill in the blank 10 $fill in the blank 11 Total $fill in the blank 13 $fill in the blank 14 Double-Declining- Balance Method $fill in the blank 3 $fill in the blank 6 $fill in the blank 9 $fill in the blank 12 $fill in the blank 15 2. What method yields the highest depreciation expense for Year 1? Straight-line methodUnits-of-activity method Double-declining-balance methodAll three depreciation methods 3. What method yields the most depreciation over the four-year life of the equipment?
Chapter11: Long-term Assets
Section: Chapter Questions
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Transcribed Image Text:Comparing Three Depreciation Methods
Dexter Industries purchased packaging equipment on January 8 for $259,400. The equipment was
expected to have a useful life of four years, or 6,800 operating hours, and a residual value of $21,400.
The equipment was used for 2,380 hours during Year 1, 1,428 hours in Year 2, 1,904 hours in Year 3,
and 1,088 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.
Depreciation Expense
Units-of-Activity
Method
$fill in the blank 2
Year
Straight-Line Method
Year 1
$fill in the blank 1
Year 2
$fill in the blank 4
$fill in the blank 5
Year 3
$fill in the blank 7
$fill in the blank 8
Year 4
$fill in the blank 10
$fill in the blank 11
Total
$fill in the blank 13
$fill in the blank 14
Double-Declining-
Balance Method
$fill in the blank 3
$fill in the blank 6
$fill in the blank 9
$fill in the blank 12
$fill in the blank 15
2. What method yields the highest depreciation expense for Year 1?
Straight-line methodUnits-of-activity method Double-declining-balance methodAll three
depreciation methods
3. What method yields the most depreciation over the four-year life of the equipment?
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