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s People Window Help 100% RX, Wed Dec 6 11:30 AM gnment/printUnta Passignmentid-686752 CengageNowv2 1 Online teaching and leaming resource from Cengage Learming 6. PR.09-02ALGO (Algorithmic) Comparing Three Depreclation Methods Waylander Coatings Company purchased waterproofing equlpment on January 6 for $540,200. The equipment was expected to have a usefu ite of four years, or 8,400 operating hours, and a residual vale The equpment was used for 3,200 hours during Year 1, 2,600 hours in Year 2, 1,500 hours in Year 3, and 1,100 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 straighe-line method, (b) the units-of-output method, and (e) the double- declining-balance method. Also determine the total depreciation expense for the four years by each method Note: FOR DECLINING BALANCE OLY. round the multelier to four deomal places. n round the rower for each year tDthe nearest whale dlr Double-Declining-Dalance Method Year Year 1 Year 2 Year 3 Year 4 Total Straight-Line Method Units-of-Output Method 2. what method yields the highest depreciation expense for Year 17 life of the equipment? 3. what method vialds the most depreciation over the four-year l MacBook AirExplanation / Answer
Annual Straight line depreciation = (Cost - Salvage value) / Useful life = ($540200 - $44600) / 4 = $123900
Total = 4 * $123900 = $495600
Units output method depreciation = (Cost - Salvage value) * Hours operated/ Total operating hours
Year 1 = ($540200 - $44600) * 3200/8400 = $188800
Year 2 = ($540200 - $44600) * 2600/ 8400 = $153400
Year 3 = ($540200 - $44600) * 1500/8400 = $88500
Year 4 = ($540200 - $44600) * 1100/8400 = $64900
Total = $495600
Double declining method depreciation = 2 * Straight line rate * Book value of asset at beginning
Year 1 = 2 * 25% * $540200 = $270100
Year 2 = 2 * 25% * ($540200 - $270100) = $135050
Year 3 = 2 * 25% * ($540200 - $270100- $135050 ) = $67525
Year 4 = 2 * 25% * ($540200 - $270100 - $135050 - $67525) = $101287.50
Total = $573962.50
2. Double declining method
3. Double declining method
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