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
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- For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.On January 1, 2020, Fast Delivery Transportation Company purchased a used aircraft at a cost of $54,300,000. Fast Delivery expects the plane to remain useful for five years (6,000,000 miles) and to have a residual value of $4,300,000. Fast Delivery expects to fly the plane 835,000 miles the first year, 1,425,000 miles each year during the second, third, and fourth years, and 890,000 miles the last year. Read the requirements, 1. Compute Fast Delivery'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 THE .. O. for 2020 and 22222 O N PEN for 2021. 4
- On January 1, 2020, Northeast USA Transportation Company purchased a used aircraft at a cost of $64,400,000. Northeast USA expects the plane to remain useful for five years (6.000,000 miles) and to have a residual value of $6,400,000. Northeast USA expects to fly the plane 725,000 miles the first year, 1,300,000 miles each year during the second, third, and fourth years, and 1,375,000 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 for 2020 and for 2021.On January 1, 2024, Nimble Delivery Service purchased a truck at a cost of $65,000. Before placing the truck in service, Nimble spent $4,000 painting it, $800 replacing tires, and $9,700 overhauling the engine. The truck should remain in service for five years and have a residual value of $6,000. The truck's annual mileage is expected to be 23,000 miles in each of the first four years and 13,000 miles in the fifth year-105,000 miles in total. In deciding which depreciation method to use, Harvey Wamer, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance) Read the requirements Requirement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. Begin by preparing a depreciation schedule using the straight-line method. Straight-Line Depreciation Schedule Date 1-1-2024 12-31-2024 12-31-2025…On January 1, 2024, Trusty Delivery Service purchased a truck at a cost of $62,000. Before placing the truck in service, Trusty spent $3,000 painting it, $1,200 replacing tires, and $3,800 overhauling the engine. The truck should remain in service for five years and have a residual value of $5,000. The truck's annual mileage is expected to be 28,000 miles in each of the first four years and 18,000 miles in the fifth year-130,000 miles in total. In deciding which depreciation method to use, Carl Thomas, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance). Read the requirements. Requirement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. Begin by preparing a depreciation schedule using the straight-line method. Straight-Line Depreciation Schedule Date 1-1-2024 12-31-2024…
- A machine that produces cellphone components is purchased on January 1, 2024, for $163,000. It is expected to have a useful life of four years and a residual value of $11,000. The machine is expected to produce a total of 200,000 components during its life, distributed as follows: 40,000 in 2024, 50,000 in 2025, 60,000 in 2026, and 50,000 in 2027. The company has a December 31 year end. (a) Calculate the amount of depreciation to be charged each year, using each of the following methods: i. Straight-line method Straight-line method depreciation $ I per year ii. Units-of-production method (Round depreciation per unit to 3 decimal places, e.g. 15.257 and depreciation expense to O decimal places, e.g. 125.)A machine that produces cellphone components is purchased on January 1, 2024, for $171,000. It is expected to have a useful life of four years and a residual value of $12,000. The machine is expected to produce a total of 200,000 components during its life, distributed as follows: 40,000 in 2024, 50,000 in 2025, 60,000 in 2026, and 50,000 in 2027. The company has a December 31 year end. (a) Calculate the amount of depreciation to be charged each year, using each of the following methods: i. Straight-line method Straight-line method depreciation Senter a dollar amount per year per year ii. Units-of-production method (Round depreciation per unit to 3 decimal places, e.g. 15.257 and depreciation expense to 0 decimal places, e.g. 125.) Units-of-production method depreciation Senter a dollar amount per unit rounded to 3 decimal places per unit Year Depreciation Expense 2024 Senter a dollar amount 2025 Senter a dollar amount 2026 Senter a dollar amount 2027 Senter a dollar amount iii.…On October 1, 2023, Pharoah Airways Ltd. purchased a new commercial aircraft for a total cost of $108.00 million. Included in the total cost are the aircraft's 2 engines, at a cost of $10.80 million each, and the aircraft's body, which costs $86.40 million. The estimated useful life of each of the aircraft's 2 engines is 10 years, with a residual value of $1.08 million. The estimated useful life of the aircraft's body is 10 years, with a residual value of $5.40 million. The entire aircraft's useful life is limited to the life of the aircraft's body. (a) Prepare the journal entries required on October 1, 2023, and December 31, 2023, if Pharoah Airways prepares financial statements in accordance with IFRS and uses straight-line depreciation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date…
- Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for $70,000 onJanuary 1, 20Y1. The truck is expected to have a five-year life with an expected residual valueof $15,000 at the end of five years. The expected additional revenues from the added deliverycapacity are anticipated to be $65,000 per year for each of the next five years. A driver will cost$40,000 in 20Y1, with an expected annual salary increase of $2,000 for each year thereafter. The annual operating costs for the truck are estimated to be $6,000 per year.a. Determine the expected annual net cash flows from the delivery truck investment for 20Y1–20Y5.b. Compute the net present value of the investment, assuming that the minimum desired rate of returnis 12%. Use the present value table appearing in Exhibit 2 of this chapter.c. Is the additional truck a good investment based on your analysis? Explain.Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for $38,000 on January 1, 20Y1. The truck is expected to have a 5-year life with an expected residual value of $7,000 at the end of 5 years. The expected additional revenues from the added delivery capacity are anticipated to be $66,000 per year for each of the next 5 years. A driver will cost $46,000 in 20Y1, with an expected annual salary increase of $4,000 for each year thereafter. The annual operating costs for the truck are estimated to be $2,000 per year. Year 1 2 3 4 5 6 7 8 9 10 20Y1 20Y2 20Y3 20Y4 Present Value of $1 at Compound Interest 6% 10% 12% 20Y5 0.943 0.890 0.840 Investment 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.909 0.826 0.751 0.683 0.621 Net present value 0.564 0.513 0.467 0.424 0.386 $ 0.893 0.797 0.712 0.636 $ $ 0.567 0.507 $ 0.452 Annual Net Cash Flow 0.404 0.361 0.322 15% 0.870 0.756 0.658 a. Determine the expected annual net cash flows from the delivery truck investment for…On October 1, 2023, Pharoah Airways Ltd. purchased a new commercial aircraft for a total cost of $108.00 million. Included in the total cost are the aircraft's 2 engines, at a cost of $10.80 million each, and the aircraft's body, which costs $86.40 million. The estimated useful life of each of the aircraft's 2 engines is 10 years, with a residual value of $1.08 million. The estimated useful life of the aircraft's body is 10 years, with a residual value of $5.40 million. The entire aircraft's useful life is limited to the life of the aircraft's body. (a) Prepare the journal entries required on October 1, 2023, and December 31, 2023, if Pharoah Airways prepares financial statements in accordance with IFRS and uses straight-line depreciation. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) 4…