Gray, Inc., a firm that makes oversized shirts, purchased a machine for its factory. The following data relate to the machine:

Price $46,000

Delivery charges $350

Installation charges $650

Date purchased May 1. 2017

Estimated useful life:

In years 10 years

In hours of production 25,000 hours of operating time

Residual value $2,000

During 2017, the machine was used 1,800 hours. During 2018, the machine was used 2,900 hours.

Required:

Determine the depreciation expense and the year-end carrying amount (book value) for the machine for the years 2017 and 2018, assuming that:

1. The straight-line method is used.

2. The units-of-production method is used.

3. If you were Gray, which depreciation method would you use in order to report the highest profits?