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Assume that at the beginning of 2020

Assume that at the beginning of 2020

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assume that at the beginning of 2020, Advanced Air purchased a Bombardier Q400 aircraft at a cost of $30,000,000. Advanced expects the plane to remain useful for five years (4,300,000 km) and to have a residual value of $5,000,000 Advanced expects the plane to be flown 850,000 km the first year, 1,050,000 km each year during years 2 through 4, and 300,000 km the last year. 1. Compute Advanced's first-year depreciation on the plane using the following methods a. Straight-line b. Units-of-production c. Double-diminishing-balance 2. Show the airplane's carrying amount at the end of the first year under each depreciation method. Which method results in the highest carrying amount? Which method produces the lowest carrying amount? Briefly explain why Requirement 1. Compute Advanced's first-year depreciation on the plane. a. Using the straight-line method, depreciation is $ (Hold all decimals during interim calculations. Round the final solution to the nearest whole number.)
Transcribed Image Text:Assume that at the beginning of 2020, Advanced Air purchased a Bombardier Q400 aircraft at a cost of $30,000,000. Advanced expects the plane to remain useful for five years (4,300,000 km) and to have a residual value of $5,000,000 Advanced expects the plane to be flown 850,000 km the first year, 1,050,000 km each year during years 2 through 4, and 300,000 km the last year. 1. Compute Advanced's first-year depreciation on the plane using the following methods a. Straight-line b. Units-of-production c. Double-diminishing-balance 2. Show the airplane's carrying amount at the end of the first year under each depreciation method. Which method results in the highest carrying amount? Which method produces the lowest carrying amount? Briefly explain why Requirement 1. Compute Advanced's first-year depreciation on the plane. a. Using the straight-line method, depreciation is $ (Hold all decimals during interim calculations. Round the final solution to the nearest whole number.)
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