Cisco Systems, Inc. purchased networking equipment on January 1, 2018, for $2,500,000. The equipment is expected to have a useful life of 10 years and a residual value of $250,000. Cisco uses the units-of-production method of depreciation. The equipment operated for 20,000 hours in 2018, 25,000 hours in 2019, 30,000 hours in 2020, 35,000 hours in 2021, and 40,000 hours in 2022. The total estimated operational hours are 300,000.

Required:

1. Calculate the depreciation expense for each year.
2. Prepare the journal entry for the depreciation expense for the year ending December 31, 2023.
3. Discuss the impact of different depreciation methods on the financial statements.