iation for the first two years on the plane using the straight-line method eciation is $ 9,600,000 for 2017 and $ 9,600,000 for 2018. d the depreciation per unit of output to two decimal places to compute d, depreciation is $ 5,757,500 for 2017 and $ 8,883,000 for 2 20,920,000 for 2017 and $ method, depreciation is $ the end of the first year under each method. 12,552,0

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question
On January 1, 2017, Northeast USA Transportation Company purchased a used aircraft at a cost of $52,300,000. Northeast USA expects the plane to remain useful for five years (7,300,000 miles)
and to have a residual value of $4,300,000. Northeast USA expects to fly the plane 875,000 miles the first year, 1,350,000 miles each year during the second, third, and fourth years, and 2,375,000
miles the last year.
Read the requirements.
1. Compute Northeast USA's depreciation for the first two years on the plane using the straight-line method, the units-of-production method, and the double-declining balance method.
a. Straight-line method
Using the straight-line method, depreciation is $
9,600,000 for 2017 and $
9,600,000 for 2018.
b. Units-of-production method (Round the depreciation per unit of output to two decimal places to compute your final answers.)
Using the units-of-production method, depreciation is $
5,757,500 for 2017 and $
8,883,000 for 2018.
c. Double-declining balance method
Using the double-declining-balance method, depreciation is $
2. Show the airplane's book value at the end of the first year under each method.
Book Value:
Less:
Book Value
20,920,000 for 2017 and $ 12,552,000 for 2018.
Straight-Line
Transcribed Image Text:On January 1, 2017, Northeast USA Transportation Company purchased a used aircraft at a cost of $52,300,000. Northeast USA expects the plane to remain useful for five years (7,300,000 miles) and to have a residual value of $4,300,000. Northeast USA expects to fly the plane 875,000 miles the first year, 1,350,000 miles each year during the second, third, and fourth years, and 2,375,000 miles the last year. Read the requirements. 1. Compute Northeast USA's depreciation for the first two years on the plane using the straight-line method, the units-of-production method, and the double-declining balance method. a. Straight-line method Using the straight-line method, depreciation is $ 9,600,000 for 2017 and $ 9,600,000 for 2018. b. Units-of-production method (Round the depreciation per unit of output to two decimal places to compute your final answers.) Using the units-of-production method, depreciation is $ 5,757,500 for 2017 and $ 8,883,000 for 2018. c. Double-declining balance method Using the double-declining-balance method, depreciation is $ 2. Show the airplane's book value at the end of the first year under each method. Book Value: Less: Book Value 20,920,000 for 2017 and $ 12,552,000 for 2018. Straight-Line
Expert Solution
steps

Step by step

Solved in 5 steps

Blurred answer
Knowledge Booster
Depreciation Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education