Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $81,900. The equipment was expected to have a useful life of 3 years, or 20,000 operating hours, and residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 6,400 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the 3 years ending December 31, by (a) the straight-line method, (b) the units-of-activity method, and (c) the dout declining-balance method. Also determine the total depreciation expense for the 3 years by each method. Do not round intermediate calculations when determining the depreciation rate. Round the final answers for each year to the nearest whole dollar. Year Year 1 Year 2 Straight-Line Method Depreciation Expense Units-of-Activity Method Year 3 Total 2. What method yields the highest depreciation expense for Year 1? Double-declining-balance method ✓ Double-Declining- Balance Method 3. What method yields the most depreciation over the 3-year life of the equipment? All three depreciation methods
Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $81,900. The equipment was expected to have a useful life of 3 years, or 20,000 operating hours, and residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 6,400 hours in Year 3. Required: 1. Determine the amount of depreciation expense for the 3 years ending December 31, by (a) the straight-line method, (b) the units-of-activity method, and (c) the dout declining-balance method. Also determine the total depreciation expense for the 3 years by each method. Do not round intermediate calculations when determining the depreciation rate. Round the final answers for each year to the nearest whole dollar. Year Year 1 Year 2 Straight-Line Method Depreciation Expense Units-of-Activity Method Year 3 Total 2. What method yields the highest depreciation expense for Year 1? Double-declining-balance method ✓ Double-Declining- Balance Method 3. What method yields the most depreciation over the 3-year life of the equipment? All three depreciation methods
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 3MCQ: When depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash...
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning