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.

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. (note: for declining balance only, round the multiplier to five decimal places. then round the answer for each year to the nearest whole dollar.)

depreciation expense

1

year

straight-line method

units-of-activity method

double-declining-balance method

2

year 1

3

year 2

4

year 3

5

total

Instructions are listed below.

Explanation:

Giving the following information:

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.

1) Straight-line:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (72,000 - 4,500)/3= $22,500

2) Units of activity:

Annual depreciation= [(original cost - salvage value)/useful life of production in units]*hours of use

Year 1= [(72,000 - 4,500)/18,000]*7600= 28,500

Year 2= 3.75*6,000= 22,500

Year 3= 4,400*3.75= 16,500

3) double declining:

Annual depreciation= 2*[(original cost - residual value)/estimated life (years)]

Year 1= [(72,000-4,500)/3]*2= 45,000

Year 2= (22,500/3)*2= 15,000

Year 3= (7,500/3)*2= 5,000

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