Comparing Three Depreciation Methods Dexter Industries purchased packaging equip

Question

Comparing Three Depreciation Methods Dexter Industries purchased packaging equipment on January 8 for $215,400. The equipment was expected to operating hours, and a residual value of $17,800. The equipment was 3. used for 2,900 hours during Year 1, 2,400 hours in Year 2, and 1,400 hours in Year operating hours and a residual value of s7,800. The caumens Required: hree years ending December 31, Year 1, Year 2, Year 3, by (a) the straight-line method, (b) 1. Determine the amount of depreciation expense for the t the units-of-activity method, and (c) the double-declining-balance method. Also determine the total d method. epreciation expense for the three years by each 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 Units-of-Activity Method Double-Declining-Balance Method Straight-Line Method Year Year 1 Year 2 Year 3 Total

Explanation / Answer

Straight line method:

Depreciation per year= (215400-17800)/3= 65867 per year in year1, year2, year3

units of activity method:

Depreciation per unit= (Cost-residual value)/ operating hours over life= (215400-17800)/ 7600= 26 per hour

Depreciation in year 1= 2900*26=75400

Depreciation in year 2= 2400*26= 62400

Depreciation in year 3= 1400*26= 36400

Double declining balance:

Depreciation = 2* 1/Life of asset *(cost-accummulated depreciation)

Depreciation in year 1= 2* 1/3 *215400= 143600

Depreciation in year 2= 2* 1/3 * (215400-143600)= 47867

Depreciation in year 3= 2* 1/3* (215400-191467)= 15956

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.