Company HappyTime purchases a game machine on June 1, 2021. The material and engineering costs amount to $34,500,000, fees and permits total $6,300,000, and taxes are 1,200,000 to build the game machine. The game machine is expected to last 30 years or 600 games. The residual value of the game machine will be $12,000,000 at the end of its useful life. The estimated game use for the first three years is: 4 games in 2021, 10 games in 2022, and 20 games in 2023.

Based on Straight-Line Method:

	December 31, 2021	December 31, 2022	December 31, 2023
Depreciation expense	$583,333	$1,000,000	$1,000,000
Net book value	$41,416,667	$40,416,667	$39,416,667

Based on Units-of-production Method:

	December 31, 2021	December 31, 2022	December 31, 2023
Depreciation expense	$200,000	$500,000	$1,000,000
Net book value	$41,800,000	41,300,000	$40,300,000

Based on Double-declining-balance Method:

	December 31, 2021	December 31, 2022	December 31, 2023
Depreciation expense	$1,641,500	$2,704,020	$2,522,850
Net book value	$40,358,500	$37,654,480	$35,131,630

(Double-declining rate of depreciation: 0.067)

1. Which method resulted in the highest depreciation expense for 2021? Why? Will that always be the case?

2. Which method resulted in the highest net book value in 2021? Why? Will that always be the case?

3. Based on all your calculations, which depreciation method do you ultimately recommend the owner to use for her new game machine? (Please provide a clear recommendation, supported by class or other credible resources, when making your recommendation.)