Computing second-year depreciation and accumulated depreciation [10-15 min]
At the beginning of 2012, Air Canada purchased a used airplane at a cost of $46,000,000. Air Canada expects the plane to remain useful for eight years (5,000,000 miles) and to have a residual value of $6,000,000. Air Canada expects the plane to be flown 1,300,000 miles the first year and 1,000,000 miles the second year.
Requirements
1. Compute second-year (2013) depreciation on the plane 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 using the straight-line method of depreciation.
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