Question

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 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-output method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

 Depreciation Expense Year Straight-Line Method Units-of-Output 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?

a)Straight line:
depreciation per year=(cost-salvage)/years
=(389400-32200)/4=89300
b)Units of output:
Per year= (hours/total hours)*(cost-salvage value)
c)Double decline:
Per year at rate of 2/years=2/4=50%

Total depreciation is 357200 across all the three methods

2)doubledecline

3)It is same for all.