FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Comparing Three
Waylander Coatings Company purchased waterproofing equipment on January 6 for $806,600. The equipment was expected to have a useful life of four years, or 10,000 operating hours, and a residual value of $66,600. The equipment was used for 3,800 hours during Year 1, 3,100 hours in Year 2, 1,800 hours in Year 3, and 1,300 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: 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 | ||||||
| Year 4 | $fill in the blank 10 | $fill in the blank 11 | $fill in the blank 12 | ||||||
| Total | $fill in the blank 13 | $fill in the blank 14 | $fill in the blank 15 |
2. What method yields the highest depreciation expense for Year 1?
3. What method yields the most depreciation over the four-year life of the equipment?
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