4. The Rowland Clinic purchased a new surgical laser for $84,000. The estimated salvage value is $4,000. The laser has a useful life of five years and the clinic expects to use it for 10,000 hours. It was used 1,600 hours in year 1; 2,100 hours in year 2; 2,400 hours in year 3; 1,900 hours in year 4; 2,000 hours in year 5.

Instructions

(a) Compute the annual depreciation for each of the five years under each of the following methods:

(1) straight-line.

(2) units-of-activity.

(b) If you were the administrator of the clinic, which method would you deem as most appropriate? Justify your answer.