Problem Data: Beaver Builders, Inc. has just purchased a new fork lift. The purchase price of the equipment is $200,000. The company expects to use the equipment for 4 years and estimates the equipment can be sold at the end of 4 years for $20,000 (its residual value).

The accountant for Beaver Builders is trying to decide which depreciation method to use for this equipment: straight-line or units of production. The foreman for the company estimates that the equipment will be used for a total of 6,000 hours.

The estimated number of hours per year are:

year 1	1,900
year 2	1,500
year 3	1,400
year 4	1,200

Requirement 1: Based on the above information, prepare a schedule showing the amount of depreciation expense and total accumulated depreciation under each method. (Round amounts on the table to the nearest whole number.)

	Straight-Line Depreciation Method
	Year 1	Year 2	Year 3	Year 4
Depreciation Expense
Accumulated Depreciation Balance

	Units of Production Depreciation Method
	Year 1	Year 2	Year 3	Year 4
Depreciation Expense
Accumulated Depreciation Balance

Requirement 2: If the companys goal is to maximize expenses and minimize net income in year 1, which depreciation method should the company select? Requirement 3: Why is it important for a business person to understand the different methods of depreciation?