Show Me How 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. Required: 1.  Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2 and Year 3 by (a)

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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    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.

    Required:

    1.  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-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three 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 the blank 7   fill in the blank 8   fill in the blank 9  
    Total $fill in the blank 10   $fill in the blank 11   $fill in the blank 12  

    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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