Comparing Three Depreciation Methods Waylander Coatings Company purchased waterp

Question

Comparing Three Depreciation Methods Waylander Coatings Company purchased waterproofing aquipment on January 6 for $455,200. The equipment was expected to have a useful life of four years, or 7,200 operating hours, and a residual value of $37,600. The equipment was used for 2.700 hours during Year 1, 2,200 hours in Year 2, 1.300 hours in Year 3 and 1,000 hours in Year 4. Required: 1. Determine the amount of depreciation expense for the years anded 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 D ouble-Declining-Balance Method Year 1 Year 2 Year 3 * | * Year 4 Total * 2. What method yields the highest depreciation expense for Year 1? Double-declining balance method 3. What method yields the most depreciation over the four-year life of the equipment? All three depreciation methods ? TC My won Asset cost minus residual value equals depreciable cost. Sum the yearly depreciation to determine total depreciation. Check My Work

Explanation / Answer

Depreciation schedule :

Straight line dep = 455200-37600/4 = 104400

Dep rate = 455200-37600/7200 = 58 per hour

Double decline rate = (100/4*2) = 50%

2) Double decline balance method

3) All three depreciation method

Straight line method Unit of output method Double declining balance method Year 1 104400 2700*58 =156600 455200*50% = 227600 Year 2 104400 2200*58=127600 227600*50% = 113800 Year 3 104400 1300*58 = 75400 113800*50% = 56900 Year 4 104400 1000*58 = 58000 19300 Total 417600 417600 417600

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