On January 1, VICOM Company purchased a $\$ 68,000$ machine. The estimated life of the machine was five years, and the estimated salvage value was $\$ 5,000$. The machine had an estimated useful life in productive output of 75.000 units. Actual output for the first two years was: year 1, 20,000 units; year 2, 15,000 units.

Purchase of Multiple Assets for a Lump Sum Required:

Basket Purchase and Partial-Year Depreciation 1. Compute the amount of depreciation expense for the first year, using each of the following methods:

a. Straight-line.

b. Units-of-production.

2. What was the book value of the machine at the end of the first year, assuming that straight-line depreciation was used?

3. If the machine is sold at the end of the fourth year for $\$ 15,000$, how much should the company report as a gain or loss (assuming straight-line depreciation)?