Gazza Ltd acquired a machine for a cost of $29 000. It is expectedt hat the machine will continue to be operational for seven years, during which time it is expected to run for 35 000 hours. The estimated residual value of the machine is $7000 at the end of its useful life.

REQUIRED

Calculate the depreciation charge for each of the first three years, using the following methods:

a. the straight-line method

b. the sum-of-digits method

c. the declining-balance method, using a 33 per cent rate

d. the units-of-production method, based on hours of operation, given that operating times are as follows: 

Year 1 6 000 hours

Year 2 7 000 hours

Year 3 5 500 hours