Comparing Three Depreciation Methods Obj. 2 Dexter Industries purchased packaging equipment on January 8 for...
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Comparing Three Depreciation Methods Obj. 2 Dexter Industries purchased packaging equipment on January 8 for $81,900. The equipment was expected to have a useful life of 3 years, or 20,000 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 6,400 hours in Year 3. Instructions 1. Determine the amount of depreciation expense for the 3 years ending December 31 , by (a) the straightline method, (b) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the 3 years by each method. The following columnar headings are suggested for recording the depreciation expense amounts: 2. What method yields the highest depreciation expense for Year 1 ? 3. What method yields the most depreciation over the 3 -year life of the equipment
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