Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000
This week you are required to complete 1 problem: Problems 8.1. You are provided an Excel template to use.
Problem 8.1 (Computing Three Depreciation Methods)
(Readings: Chapter 10)
Dexter Industries purchased packaging equipment on January 8 for $72,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $4,500. The equipment was used for 7,600 hours during Year 1, 6,000 hours in Year 2, and 4,400 hours in Year 3.
INSTRUCTIONS
- 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
2. Determine the total depreciation expense for the three years by each method. What method yields the highest depreciation expense for Year 1?
- What method yields the most depreciation over the three-year life of the equipment?
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