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 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3. Instructions 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

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 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3. Instructions 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

Name: method. The following columnar headings are suggested for recording t
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Description: method. The following columnar headings are suggested for recording the depreciation expenseamounts:YearStraight-LineMethodDepreciation ExpenseUnits-of-ActivityMethodDouble-Declining-BalanceMethod2. What method yields the highest depreciation expens

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

method. The following columnar headings are suggested for recording the depreciation expense
amounts:
Year
Straight-
Line
Method
Depreciation Expense
Units-of-
Activity
Method
Double-Declining-
Balance
Method
2. 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?

Obj.2
PR 9-2A 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 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400
hours in Year 3.
Instructions
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
(Continued)
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Comparing three depreciation methodsDexter Industries purchased packaging equipment on January 8, Year 1, 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 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3.Instructions1. Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, and Year 3 by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by each method. The following columnar headings are suggested for recording the depreciation expense amounts: -Depreciation Expense- year straight-line method units of output method double-declining balance method
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