In: Accounting
Comparing Three Depreciation Methods
Waylander Coatings Company purchased waterproofing equipment on January 6 for $321,800. The equipment was expected to have a useful life of four years, or 7,200 operating hours, and a residual value of $26,600. 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 ended December 31, Year 1, Year 2, Year 3, and Year
4, 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 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-Activity Method Double-Declining-Balance Method
Year 1 $_______________ $___________________ $______________________
Year 2 $_______________ $___________________ $______________________
Year 3 $_______________ $___________________ $______________________
Year 4 $_______________ $___________________ $______________________
Total $_______________ $___________________ $______________________
What method yields the highest depreciation expense for Year 1?
______________
What method yields the most
depreciation over the four-year life of the equipment?
_______________