Question

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 double-declining-balance method. Also determine the total depreciation expense for the three years by each method. (Note: For STRAIGHT-LINE ONLY, round the first two years to the nearest whole dollar, then round the third year as necessary. For DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar.)

2.

What method yields the highest depreciation expense for Year 1?

3.

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

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 double-declining-balance method. Also determine the total depreciation expense for the three years by each method. (Note: For STRAIGHT-LINE ONLY, round the first two years to the nearest whole dollar, then round the third year as necessary. For DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar.)

Question not attempted.

Score: 0/45

Depreciation Expense

1	Year	Straight-Line Method	Units-of-Activity Method	Double-Declining-Balance Method
2	Year 1
3	Year 2
4	Year 3
5	Total

What method yields the highest depreciation expense for Year 1?

Answer 1

Depreciation Expense 1 Year Straight-Line Method Units-of-Activity Method Double-Declining-Balance Method 2 Year 1 (111200-7200/3) = 34667 8680*5.2 = 45136 111200*2/3 = 74134 3 Year 2 34667 7360*5.2 = 38272 24711 4 Year 3 34666 20592 5155 5 Total 104000 104000 104000

What method yields the highest depreciation expense for Year 1?

Double decline method yields the highest depreciation expense for year 1

c) All of three methods