Question

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.

DepreciationExpense
Year	Straight-LineMethod	Units-of-OutputMethod	Double-Declining-BalanceMethod
2011	$	$	$
2012	$	$	$
2013	$	$	$
2014	$	$	$
Total	$	$	$

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