Depreciation Calculations Gretchen, Inc., a firm that makes oversized boots, purchased a machine for its factory. The following data relate to the machine: Price $38,500 Delivery charges $450 Installation charges $550 Date purchased May 1, 2017 Estimated useful life: In years 10 years In hours of production 25,000 hours of operating time Salvage value $2,000 During 2017, the machine was used 2,000 hours. During 2018, the machine was used 3,000 hours. Required: 1. Determine the depreciation expense and the year-end carrying amount for the machine for the years 2017 and 2018, assuming that the straight-line method is used. 2017 2018 Depreciation Expense $ $ 3,750 Carrying Amount 2. Determine the depreciation expense and the year-end carrying amount for the machine for the years 2017 and 2018, assuming that the units-of-production method is used. 2017 2018 Depreciation Expense Carrying Amount C $ $0 3. If you were Gretchen, which method would you use in order to report the highest profits in 2017 and 2018 combined? income in 2017 and 2018 combined. Because straight-line depreciation provides the smallest amount of depreciation expense in early years, net income would be higher with this The straight-line method would be used in order to report the highest method than with the others