Dexter Industries purchased packaging equipment on January 8 for $72,000. The equip-ment was expected to have a useful life of three years, or 18,000 operating hours, and aresidual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000hours in Year 2, and 4,400 hours in Year 3.Instructions1. Determine the amount of depreciation expense for the three years ending December 31by (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 threeyears by each method. The following columnar headings are suggested for recordingthe depreciation expense amounts:Depreciation ExpenseStraight-LineDouble-Declining-BalanceMethodUnits-of-ActivityMethodMethodYear2. 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?

Three methods of depreciation are:Straight-line method: Under the straight-line method of…

Answered: Dexter Industries purchased packaging…

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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Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $667,000. The equipment was expected to have a useful life of four years, or 6,800 operating hours, and a residual value of $55,000. 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 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…
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s
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