Question

Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $310,600. The equipment...

Comparing Three Depreciation Methods

Dexter Industries purchased packaging equipment on January 8 for $310,600. The equipment was expected to have a useful life of three years, or 7,500 operating hours, and a residual value of $25,600. The equipment was used for 3,000 hours during Year 1, 2,325 hours in Year 2, and 2,175 hours in Year 3.

Required:

1. Determine the amount of depreciation expense for the three years ending December 31, Year 1, Year 2, Year 3, 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 all methods, 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 $ $ $
Total $ $ $

2. What method yields the highest depreciation expense for Year 1?
All three depreciation methods

3. What method yields the most depreciation over the three-year life of the equipment?

Homework Answers

Answer #1

1.

Straight Line method Units-of-Activity method Double Declining balance method
Year 1 (310600-25600)/3=95000 (310600-25600)/7500 x3000=114000 207046
Year 2 95000 (310600-25600)/7500 x 2325= 88350 69029
Year 3 95000 (310600-25600)/7500 x 2175=82650 8925
Total 285000 285000 285000

Double declining balance method.

Straight line depreciation rate = 1/3 = 33.33%

Depreciation rate double decling balance method=33.33 % x 2 = 66.66

Opening balance Depreciation Closing balance
Year 1 310600 310600*66.66%=207046 103554
Year 2 103554 103554*66.66%=69029 34525
Year 3 34525 8925* 25600

Given that the salvage value is 25600. But the opening balance of the third year is 34525. Hence the depreciation for the third year restricted to 8925 (34525-25600)

2. Double declining balance method

3. The three methods give same depreciation ; 285000

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $112,500. The equipment...
Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $112,500. The equipment was expected to have a useful life of three years, or 22,500 operating hours, and a residual value of $4,500. The equipment was used for 9,000 hours during Year 1, 6,750 hours in Year 2, and 6,750 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the three years ending December 31, by (a) the straight-line method, (b) the units-of-activity...
Dexter Industries purchased packaging equipment on January 8 for $111,200. The equipment was expected to have...
Dexter Industries purchased packaging equipment on January 8 for $111,200. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $7,200. The equipment was used for 8,680 hours during Year 1, 7,360 hours in Year 2, and 3,960 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...
Dexter Industries purchased packaging equipment on January 8 for $98,000. The equipment was expected to have...
Dexter Industries purchased packaging equipment on January 8 for $98,000. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,000. The equipment was used for 8,980 hours during Year 1, 6,930 hours in Year 2, and 4,090 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...
Dexter Industries purchased packaging equipment on January 8 for $116,600. The equipment was expected to have...
Dexter Industries purchased packaging equipment on January 8 for $116,600. The equipment was expected to have a useful life of three years, or 20,000 operating hours, and a residual value of $6,600. The equipment was used for 8,700 hours during Year 1, 7,380 hours in Year 2, and 3,920 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...
Comparing Three Depreciation Methods Waylander Coatings Company purchased waterproofing equipment on January 6 for $389,400. The...
Comparing Three Depreciation Methods Waylander Coatings Company purchased waterproofing equipment on January 6 for $389,400. The equipment was expected to have a useful life of four years, or 7,600 operating hours, and a residual value of $32,200. The equipment was used for 2,900 hours during Year 1, 2,400 hours in Year 2, 1,400 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...
Dexter Industries purchased packaging equipment on January 1 for $72,000. The equipment was expected to have...
Dexter Industries purchased packaging equipment on January 1 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 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 4,400 hours in Year 3. Instructions Determine the amount of depreciation expense for the first year by (a) the straight-line method (b) the units-of-activity method (c) the double-declining-balance method. Exercise 2 The...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $40,770. The...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $40,770. The equipment was expected to have a useful life of three years, or 3,780 operating hours, and a residual value of $1,080. The equipment was used for 700 hours during Year 1, 1,300 hours in Year 2, 1,100 hours in Year 3, and 680 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2,...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $32,670. The...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $32,670. The equipment was expected to have a useful life of three years, or 4,860 operating hours, and a residual value of $1,080. The equipment was used for 900 hours during Year 1, 1,700 hours in Year 2, 1,500 hours in Year 3, and 760 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2,...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $54,540. The...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $54,540. The equipment was expected to have a useful life of three years, or 3,780 operating hours, and a residual value of $1,620. The equipment was used for 700 hours during Year 1, 1,300 hours in Year 2, 1,100 hours in Year 3, and 680 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2,...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $42,390. The...
Depreciation by Three Methods; Partial Years Perdue Company purchased equipment on April 1 for $42,390. The equipment was expected to have a useful life of three years, or 4,320 operating hours, and a residual value of $1,350. The equipment was used for 800 hours during Year 1, 1,500 hours in Year 2, 1,300 hours in Year 3, and 720 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT