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Problem #2:  Compare three depreciation methods

Breyer Company purchased packaging equipment on January 3, 2010, for $101,250. The equipment was expected to have a useful life of three years, or 25,000 operating hours, and a residual value of $7,500. The equipment was used for 9,500 hours during 2010,8,400 hours in 2011, and 7,100 hours in 2012.

Instructions (be sure to show all of your work, all calculations to receive full credit)

1.  Determine the amount of depreciation expense for the years ended December 31, 2010, 2011, and 2012, by

a.  the straight-line method,  

b.  the units-of-production method, and

c.  the double-declining-balance method.

2.  Also determine the total depreciation expense for the three years by each method.

The following columnar headings are suggested for recording the depreciation expense amounts (record the totals at the bottom of each column):

  Depreciation Expense

Year  Straight-Line Method  Units-of-Production Method  Double-Declining-Balance Method

 
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