Question

nJanuay 1, 2018, Alaska Freght Are pre ased a used a plane at a o st of$52,500,000 Alaska Fre e An eo pects the pla etormar used fo eight years (4,000,000 mles)and ๒ have a laska Freight Alrine expects the plane to be fown 1,500,000 miles the irst year and 1,000,000 miles the second year Read the requirements idual value of $4,500,000. Requirement 1a. Compute second year (2019) depreciation expense on the plane using the straight-line method Begin by selectingthe formula to calculate the company's second-year depreaation oprse on the …uarg the straigden metod. Then enter the amonts and aladate the eato·mpene the secod yer Residual value )1 Requirement 1b. Compute second-year (2019) depreciation expense on the piane using the units-of-production method Belore caloulating the second-year depreciation expense on the plane using the units-of-production method, caloulate the depreciation expense per unit. Select the fomula, then ender the amourts and caloulate the dapreciation expense per unit Cost Residual value )r 45000040000012 Now, select the formula, enter the amounts and caloulate the company's second-year depreciation expense on the plane using the units-of-p 1500000 Requirement te. Compute second-year (2019) depreciation expense on the plane using the double-declining-balance method

Answer 1

Answer 1(a):

Answer 1(b):

Answer 1(c):

Double declining balance method:

1st Year depreciation:

Book Value * 2 * (1 /Useful life) = Double declining Depreciation

Year 1 Depreciation = $52,500,000 * 2 * 1/8 =$13,125,000

Accumulated depreciation at the end of year 1 = $13,125,000

Second year depreciation is calculated as follows:

Answer 2:

Units of production method: Year 1 depreciation = 1,500,000 * $12 = $18,000,000