Question

1. Comparing Three Depreciation Methods

   Dexter Industries purchased packaging equipment on January 8 for $274,600. The equipment was expected to have a useful life of three years, or 7,200 operating hours, and a residual value of $22,600. 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, Year 1, Year 2, Year 3, 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 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	$		$		$
   Year 2	$		$		$
   Year 3	$		$		$
   Total	$		$		$

   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?
   

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Answer 1