Sternberg Company purchased office equipment on January 1, 2016, for $68,000. The asset was depreciated over a six-year life and a residual value of $8,000 was anticipated.
Determine the amount of the depreciation expense using the straight-line method and the double- declining balance method

Monte’s Coffee Company purchased packaging equipment on January5, 2014, for $90,000. The equipment was expected to have a usefullife of three years, or 20,000 operating hours, and a residualvalue of $6,000. The equipment was used for 8,900 hours during2014, 7,100 hours in 2015, and 4,000 hours in 2016.

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Depreciation Expense

1. Determine the amount of depreciation expense for the yearsended December 31, 2014, 2015, and 2016 by (a) the straight-linemethod, (b) the units-of-output method, and (c) thedouble-declining-balance method. Also determine the totaldepreciation expense for the three years by each method.

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Asset cost minus residual value equals depreciable cost. Sum theyearly depreciation to determine total depreciation.

Annual units-of-production depreciation allocates the cost ofthe asset equally over the units produced (hours).

The double-declining rate is two times the straight-line rate.Book value is the asset cost minus accumulated depreciation. In thefirst year, the balance in the accumulated depreciation account iszero.

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Comparing Three Depreciation Methods

Dexter Industries purchased packaging equipment on January 8 for $310,600. The equipment was expected to have a useful life of three years, or 7,500 operating hours, and a residual value of $25,600. The equipment was used for 3,000 hours during Year 1, 2,325 hours in Year 2, and 2,175 hours in Year 3.

Required:

1. Determine the amount of depreciation expense for the three years ending December 31, Year 1, Year 2, Year 3, 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 all methods, round the answer for each year to the nearest whole dollar.

2. What method yields the highest depreciation expense for Year 1?
All three depreciation methods

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

Comparing Three Depreciation Methods

Newbirth Coatings Company purchased waterproofing equipment onJanuary 2, 2011, for $340,000. The equipment was expected to have auseful life of four years, or 8,000 operating hours, and a residualvalue of $28,000. The equipment was used for 3,000 hours during2011, 2,500 hours in 2012, 1,400 hours in 2013, and 1,100 hours in2014.

Required:

1. Determine the amount of depreciation expensefor the years ended December 31, 2011, 2012, 2013, and 2014, by (a)the straight-line method, (b) the units-of-output method, and (c)the double-declining-balance method. Also determine the totaldepreciation expense for the four years by each method.

Note: FOR DECLINING BALANCE ONLY, round the multiplier to fourdecimal places. Then round the answer for each year to the nearestwhole dollar.

2. What method yields the highest depreciationexpense for 2013?
SelectStraight-line methodUnits-of-outputmethodDouble-declining-balance methodAll three depreciationmethodsItem 16

3. What method yields the most depreciationover the four-year life of the equipment?
SelectStraight-line methodUnits-of-outputmethodDouble-declining-balance methodAll three depreciationmethods