Problem 8.1 (Computing Three Depreciation Methods)

  

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

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

2. Determine the total depreciation expense for the three years by each method. What method yields the highest depreciation expense for Year 1?

1. What      method yields the most depreciation over the three-year life of the      equipment?