Question

Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3.

	Required:
1.	Determine the amount of depreciation expense for the three years ending 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 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 ending 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 DECLINING BALANCE ONLY, round the multiplier to five decimal places. Then round the answer for each year to the nearest whole dollar.)

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

2. What method yields the highest depreciation expense for Year 1?

Straight-line method

Units-of-output method

Double-declining-balance method

All three depreciation methods

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

Straight-line method

Units-of-output method

Double-declining-balance method

All three depreciation methods

Answer 1