# Perdue Company purchased equipment on April 1 for \$270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of \$9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4?Required: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) units-of-activity method, and (c) the double-declining-balance method?Note: FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar.

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Perdue Company purchased equipment on April 1 for \$270,000. The equipment was expected to have a useful life of three years or 18,000 operating hours, and a residual value of \$9,000. The equipment was used for 7,500 hours during Year 1, 5,500 hours in Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4?

Required:

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) units-of-activity method, and (c) the double-declining-balance method?

Note: FOR DECLINING BALANCE ONLY, round the answer for each year to the nearest whole dollar.

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Step 1

Depreciation is the loss in the value of the asset caused due to its usage, wear and tear.

There are different methods available for computation of depreciation like, Straight line method, sum of digits, units of activity, double declining method.

Depreciation under straight-line depreciation

Yearly Depreciation= (Cost of the asset – salvage value) ÷ Estimated Useful life of the asset

Depreciation under Units of activity:

Depreciation Rate            = (Cost of the asset – salvage value) ÷ Estimated Activity Capacity

Depreciation under Double-Declining balance method

Depreciation rate = (1÷ Useful Life of the asset ) * 2

Step 2

Depreciation under Straight Line Method

Step 3

Depreciation under Units ...

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