Dexter Industries purchased packaging equipment on January 8 for$87,200. The equipment was expected to have a useful life of threeyears, or 20,000 operating hours, and a residual value of $7,200.The equipment was used for 8,590 hours during Year 1, 7,370 hoursin Year 2, and 4,040 hours in Year 3.
| Required: |
| 1. | Determine the amount of depreciation expense for the threeyears ended December 31 by (a) the straight-line method, (b) theunits-of-activity method, and (c) the double-declining-balancemethod. Also determine the total depreciation expense for the threeyears by each method. (Note: For STRAIGHT-LINE ONLY, round thefirst two years to the nearest whole dollar, then round the thirdyear as necessary. For DECLINING BALANCE ONLY, round the multiplierto five decimal places. Then round the answer for each year to thenearest whole dollar.) |
| 2. | What method yields the highest depreciation expense for Year1? |
| 3. | What method yields the most depreciation over the three-yearlife of the equipment? |
