PR 10-2A Comparing three depreciation methods 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 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. OBJ. 2 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 method. The following columnar headings are suggested for recording the depreciation expense amounts: Depreciation Expense Double-Declining- Straight- Line Units-of- Activity Method Balance Year Method 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?
PR 10-2A Comparing three depreciation methods 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 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. OBJ. 2 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 method. The following columnar headings are suggested for recording the depreciation expense amounts: Depreciation Expense Double-Declining- Straight- Line Units-of- Activity Method Balance Year Method 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?
Chapter1: Financial Statements And Business Decisions
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
Transcribed Image Text:PR 10-2A Comparing three depreciation methods
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 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.
OBJ. 2
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 method. The following columnar headings are suggested for recording
the depreciation expense amounts:
Depreciation Expense
Straight-
Line
Method
Units-of-
Double-Declining-
Activity
Method
Balance
Method
Year
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?
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