Dexter Industries purchased packaging equipment on January 8 for $86,400. The equipment was expected to have a useful life of three years, or 21,600 operating hours, and a residual value of $5,400. The equipment was used for 8,640 hours during Year 1, 6,480 hours in Year 2, and 6,480 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. Round the final answers 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?

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Comparing three depreciation methods

Dexter Industries purchased packaging equipment on January 8 for $86,400. The equipment was expected to have a useful life of three years, or 21,600 operating hours, and a residual value of $5,400. The equipment was used for 8,640 hours during Year 1, 6,480 hours in Year 2, and 6,480 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. Round the final answers 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?
 

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