Dexter Industries purchased packaging equipment on January 8 for $448,600. The equipment was expected to...
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Accounting
Dexter Industries purchased packaging equipment on January 8 for $448,600. The equipment was expected to have a useful life of four years, or 8,400 operating hours, and a residual value of $37,000. The equipment was used for 2,940 hours during Year 1, 1,764 hours in Year 2, 2,352 hours in Year 3, and 1,344 hours in Year 4.
Required:
1. Determine the amount of depreciation expense for the four 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 four 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
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 & Explanation
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