Comparing Three Depreciation Methods
Waylander Coatings Company purchased waterproofing equipment on January 6 for $252,000. The equipment was expected to have a useful life of four years, or 6,800 operating hours, and a residual value of $20,800. The equipment was used for 2,600 hours during Year 1, 2,100 hours in Year 2, 1,200 hours in Year 3, and 900 hours in Year 4.
Required:
1. Determine the amount of depreciation expense
for the years ended December 31, Year 1, Year 2, Year 3, and Year
4, 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.
Note: FOR DECLINING BALANCE ONLY, round the multiplier to four
decimal places. Then 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 | $ | $ | $ | ||||||
Year 2 | $ | $ | $ | ||||||
Year 3 | $ | $ | $ | ||||||
Year 4 | $ | $ | $ | ||||||
Total | $ | $ | $ |
2. What method yields the highest depreciation
expense for Year 1?
3. What method yields the most depreciation over the four-year life of the equipment?
Answer with working notes is given below
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