50.1K

Verified Solution

Link Copied!

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.
	Depreciation Expense
				a.		b.		c.
				Straight-		Units-of-		Double-Declining-
		Year		Line		Activity		Balance
		1
		2
		3
		Totals
		Calculations:
		Straight-line method:
		(Cost	Residual Value)	/	Years	=	Yearly Depreciation
		Units-of-activity method:
		(Cost	Residual Value)	/	Total Hours	=	Rate
				Rate	x	Hours	=	Yearly Depreciation
		Year 1
		Year 2
		Year 3
		Double-declining-balance method:
				Depreciable Balance
				x	Rate	=	Yearly Depreciation
		Year 1
		Year 2
		Since depreciation cannot cause book value to fall below residual value:
				Depreciable Balance		Residual Value
					=	Yearly Depreciation
		Year 3

Answer & Explanation Solved by verified expert

See Answer