Miles Construction Company purchased a new machine $1,400,000 at the beginning of year 1. In addition to the purchase price, Miles paid $10,000 freight charges, $12 000 customs duty, and $ 20,000 for specialised training to be able to use the machine. After 6 months of its installation, Miles also paid another $10,000 for insurance. The machine has an estimated residual value of $140,000 and an estimated life of six years. The machine is expected to last 20,000 hours. It was used 3,600 hours in year 1, 4000 in year 2, and 5,000 in year 3.

Requirement: 1) Compute the annual depreciation and carrying value for the new machine for each of the three years under each of the following methods: (a) straight line, (b) production, and (c) double-declining balance.

2) If the machine is sold for $1,000,000 after year 3, what would be the amount of gain or loss under each method?