Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
5th Edition
ISBN: 9780134078939
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 9.4SE
Computing second-year
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
1. Compute second-year (2017) depreciation expense on the p lane using the following methods:
a. Straight-line
b. Units-of-production
c. Double- declining-balance
2. Calculate the balance in Accumulated Depreciation at the end of the second year for all three methods.
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Computing second-year depreciation and accumulated depreciation
On January 1, 2018, Advanced Airline purchased a used airplane at a cost of $60,500,000. Advanced Airline expects the plane to remain useful for eight years (5,000,000 miles) and to have a residual value of $5,500,000. Advanced Airline expects the plane to be flown 1,100,000 miles the first year and 1,200,000 miles the second year.
Requirements
Compute second-year (2019) depreciation expense on the plane using the following methods:
Straight-line
Units-of-production
Double-declining-balance
2. Calculate the balance in Accumulated Depreciation at the end of the second year for all three methods.
Computing first-year depreciation and book value
On January 1, 2018, Air Canadians purchased a used airplane for $37,000,000. Canadians expect the plane to remain useful for five years (4,000,000 miles) and to have a residual value of $5,000,000. The company expects the plane to be flown 1,400,000 miles during the first year.
Requirements
Compute Air Canadian’s first-year depreciation expense on the plane using the following methods:
Straight-line
Units-of-production
Double-declining-balance
Show the airplane’s book value at the end of the first year for all three methods.
Computing first-year depreciation and book value
On January 1, 2018, Air Canadians purchased a used airplane for $37,000,000. Canadians expects the plane to remain useful for five years (4,000,000 miles) and to have a residual value of $5,000,000. The company expects the plane to be flown 1,400,000 miles during the first year.
Requirements
Compute Air Canadian’s first-year depreciation expense on the plane using the following methods:
a. Straight-line
b. Units-of-production
c. Double-declining-balance
Show the airplane’s book value at the end of the first year for all three methods.
Chapter 9 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
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