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Comparing Three Depreciation Methods

Dexter Industries purchased packaging equipment on January 8 for $486,600. The equipment was expected to have a useful life of three years, or 7,200 operating hours, and a residual value of $40,200. The equipment was used for 2,880 hours during Year 1, 2,232 hours in Year 2, and 2,088 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. For all methods, 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	$fill in the blank 1		$fill in the blank 2		$fill in the blank 3
Year 2	$fill in the blank 4		$fill in the blank 5		$fill in the blank 6
Year 3	$fill in the blank 7		$fill in the blank 8		$fill in the blank 9
Total	$fill in the blank 10		$fill in the blank 11		$fill in the blank 12

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?

Answer 1