Answered: ast Delivery expects the plane to…

ast Delivery expects the plane to remain useful for five years (6, 4,300,000. Fast Delivery expects to fly the plane 835,000 miles t he second, third, and fourth years and 890 000 miles the last yea

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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Question

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

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Step 1: Straight line depreciation-

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Step 3: Double Declining Balance Method-

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