Production equ ipment bought at a cost of £37000 has an estimated useful life of five year s and a scrap value of £2000 at the end of that time. Estimated pattern of usage over the five year s is as follows:

Year Hours in use I 4000 2 3500 3 2500 4 2000 5 2000 The declining pattern of usage is expected to result from a higher level of maint enance work required in later years of life, and not from any decline in demand for the output.

(a) Explain the depreciat ion method which you consider to be the most appropriate for this equ ipment.

(b) Calculate the depreciation charg e for each year of useful life using the depreciation method advocated in

(a) and the result ing written-down book value of the asset at the end of each year.

(c) Show jo urna l entries to record the depreciation expense in Year I.