Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $108,000. The equipment was expected to have a useful life of thre or 27,000 operating hours, and a residual value of $5,400. The equipment was used for 10,800 hours during Year 1, 8,100 hours in Yea 8,100 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 unit activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by eacl 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 Year 2 %$4 %$4 Year 3 Total
Comparing three depreciation methods Dexter Industries purchased packaging equipment on January 8 for $108,000. The equipment was expected to have a useful life of thre or 27,000 operating hours, and a residual value of $5,400. The equipment was used for 10,800 hours during Year 1, 8,100 hours in Yea 8,100 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 unit activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the three years by eacl 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 Year 2 %$4 %$4 Year 3 Total
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 5MC: A machine with a 4-year estimated useful life and an estimated 15% residual value was acquired on...
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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.
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Transcribed Image Text:Comparing three depreciation methods
Dexter Industries purchased packaging equipment on January 8 for $108,000. The equipment was expected to have a useful life of three ye
or 27,000 operating hours, and a residual value of $5,400. The equipment was used for 10,800 hours during Year 1, 8,100 hours in Year 2,
8,100 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-c
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
$4
Year 2
$
Year 3
Total
$4
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