S10-4 Computing second-year depreciation and accumulated depreciation
Learning Objective 2
At the beginning of 2016, Air Asia purchased a used airplane at a cost of $40,000,000. Air Asia expects the plane to remain useful for eight years (5,000,000 miles) and to have a residual value of $5,000,000. Air Asia expects the plane to be flown 1,200,000 miles the first year and 1,400,000 miles the second year.
Requirements
Compute second-year (2017) depreciation expense on the plane using the following methods:
Straight-line Units-of-production Double-declining-balance
Calculate the balance in Accumulated Depreciation at the end of the second year for all three methods.