On January 1,
20242024,
Northeast AirlinesNortheast Airlines
purchased a used airplane for
$ 65 comma 600 comma 000$65,600,000.
Northeast AirlinesNortheast Airlines
expects the plane to remain useful for
fourfour
years
(6 comma 000 comma 0006,000,000
miles) and to have a residual value of
$ 5 comma 600 comma 000$5,600,000.
The company expects the plane to be flown
1 comma 100 comma 0001,100,000
miles during the first year.
Read the
requirements
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Part 1
Requirement 1a. Compute
Northeast AirlinesNortheast Airlines's
first-year depreciation expense on the plane using the straight-line method.
Begin by selecting the formula to calculate the company's first-year depreciation expense on the plane using the straight-line method. Then enter the amounts and calculate the depreciation for the first year.
Part 2
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Straight-line depreciation
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Part 3
Requirement 1b. Compute
Northeast AirlinesNortheast Airlines's
first-year depreciation expense on the plane using the units-of-production method.
Before calculating the first-year depreciation expense on the plane using the units-of-production method, calculate the depreciation expense per unit. Select the formula, then enter the amounts and calculate the depreciation per unit.
Part 4
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Depreciation per unit
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Part 5
Now, select the formula, enter the amounts, and calculate the company's first-year depreciation expense on the plane using the units-of-production method.
×
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Units-of-production depreciation
×
=
Part 6
Requirement 1c. Compute
Northeast AirlinesNortheast Airlines's
first-year depreciation expense on the plane using the double-declining-balance method.
Begin by selecting the formula to calculate the company's first-year depreciation expense on the plane using the double-declining-balance method. Then enter the amounts and calculate the depreciation expense for the first year. (Enter "0" for items with a zero value.)
Part 7
Double-declining-
(
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) ×
=
balance depreciation
(
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) ×
=
Part 8
Requirement 2. Show the airplane's book value at the end of the first year for all three methods.
Straight-Line
Units-of-production
Double-declining-balance
Cost
Less: Accumulated Depreciation
Book Value