John is contemplating of acquiring a machine for his confectionery startup on July 1 of the current year for $750,000. He understands there are three commonly used methods for calculating depreciation on capital assets. Calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 20,000 hours, with a salvage value of $75,000). During the machine's 5-year life its hourly usage was: 3,000; 4,000; 5,000; 5,000; and 3,000 hours.

• Should the purchase of this machine be treated as revenue expenditure or capital expenditure?
• Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Double- Units-of- Declining- Year Straight-Line Production Balance Year 1 $ S Year 2 Year 3 Year 4 Year 5 Total