On January 1, Top Flight 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) and year 2, (15,000 units).

Required:

1. Compute the amount of depreciation expense for the first year, using each of the following methods:

a. Straight-line
b. Units-of-production
c. Sum-of-the-years'-digits
d. Double-declining-balance

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)?