The Apolo Hospital purchased a new equipmentfor $120,000. The estimated salvage value is

$15,000. The equipmenthas a useful life of five years and the hospital expects to use it 10,400 hours. It was used 1,900 hours in year 1; 2,200 hours in year 2; 2,700 hours in year 3; 1,800 hours in year4; 1,800 hours in year 5.

Instructions

(a) Compute the annual depreciation for each of the five years under each of the following

methods:

(1) straight-line.

(2) units-of-activity.

(b) If you were the procurement manager of the hospital, which method would you prefer and why?