PR 9- 2B Comparing Three Depreciation Methods
Obj. 2
Waylander Coatings Company purchased waterproofing equipment on January 6 for $320,000. The
equipment was expected to have a useful life of four years, or 20,000 operating hours, and a
residual value of $35,000. The equipment was used for 7,200 hours during Year 1, 6,400 hours in
Year 2, 4,400 hours in Year 3, and 2,000 hours in Year 4.
Instructions
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. The following columnar headings are suggested for recording the depreciation
expense amounts:
Year Straight-Line Method Units-of-Activity Method Double-Declining-Balance Method
Answer
a. Year 1: straight-line depreciation, $71,250
