80.2K

Verified Solution

Link Copied!

Comparing Three Depreciation Methods

Waylander Coatings Company purchased waterproofing equipment on January 6 for $655,800. The equipment was expected to have a useful life of four years, or 6,400 operating hours, and a residual value of $54,200. The equipment was used for 2,400 hours during Year 1, 2,000 hours in Year 2, 1,200 hours in Year 3, and 800 hours in Year 4.

Required:

1. 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) the units-of-activity method, and (c) the double-declining-balance method. Also determine the total depreciation expense for the four years by each method. Note: FOR DECLINING BALANCE ONLY, round the multiplier to four decimal places. Then round the answer for each year to the nearest whole dollar.

Depreciation Expense
Year	Straight-Line Method			Units-of-Activity Method			Double-Declining-Balance Method
Year 1		$fill in the blank 1			$fill in the blank 2			$fill in the blank 3
Year 2		$fill in the blank 4			$fill in the blank 5			$fill in the blank 6
Year 3		$fill in the blank 7			$fill in the blank 8			$fill in the blank 9
Year 4		$fill in the blank 10			$fill in the blank 11			$fill in the blank 12
Total		$fill in the blank 13			$fill in the blank 14			$fill in the blank 15

2. What method yields the highest depreciation expense for Year 1? Double-declining-balance method

3. What method yields the most depreciation over the four-year life of the equipment? Double-declining-balance method

Answer & Explanation Solved by verified expert

See Answer