Question

Show Me How Calculator apter 9 - Assignment 3 eBook Comparing three depreciation methods Instructions Depreciation Expense Final Questions LI Х Instructions Dexter Industries purchased packaging equipment on January 8 for $86,900. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,900. The equipment was used for 8,640 hours during Year 1,6,710 hours in Year 2, and 4,650 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three years ended 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. (Note: For STRAIGHT-LINE ONLY, round the first two years to the nearest whole dollar, then round the third year as necessary. For DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar) 2. What method yields the highest depreciation expense for Year 1? 3. What method yields the most depreciation over the three-year We of the equipment?

Answer 1

Year	Straight-line Method	Units of Activity Method	Double Declining Method
Year 1	$ 26,667	$ 34,560	$ 57,933
Year 2	26,667	26,840	19,311
Year 3	26,666	18,600	2,756
Total	$ 80,000	$ 80,000	$ 80,000

2. The double declining balance method yields the highest depreciation expense for Year 1.

3. All the three methods yield the same total amount of depreciation over the three- year life of the equipment.