On January 1, 2020, AmerEx Transportation Company purchased a used aircraft at a cost of $51,000,000. AmerEx expects the plane to remain useful for five years (7,000,000 miles) and to have a residual value of $5,000,000. AmerEx expects to fly the plane 925,000 miles the first year, 1,250,000 miles each year during the second, third, and fourth years, and 2,325,000 miles the last year. Read the requirements. 1. Compute AmerEx'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 b. Units-of-production method (Round the depreciation per unit of output to two decimal places to compute your final answers.) Using the units-of-production method, depreciation is for 2020 and c. Double-declining balance method Book Value: Using the double-declining-balance method, depreciation is 2. Show the airplane's book value at the end of the first year under each method. Units-of- Production Less: Book Value for 2020 and Straight-Line for 2020 and for 2021. for 2021. C Double-Declining- Balance for 2021. Requirements 1. Compute AmerEx's depreciation for the first two years on the plane using the following methods: a. Straight-line method b. Units-of-production method (round depreciation per mile to the closest cent) c. Double-declining-balance method 2. Show the airplane's book value at the end of the first year under each depreciation method. Print Done - X
On January 1, 2020, AmerEx Transportation Company purchased a used aircraft at a cost of $51,000,000. AmerEx expects the plane to remain useful for five years (7,000,000 miles) and to have a residual value of $5,000,000. AmerEx expects to fly the plane 925,000 miles the first year, 1,250,000 miles each year during the second, third, and fourth years, and 2,325,000 miles the last year. Read the requirements. 1. Compute AmerEx'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 b. Units-of-production method (Round the depreciation per unit of output to two decimal places to compute your final answers.) Using the units-of-production method, depreciation is for 2020 and c. Double-declining balance method Book Value: Using the double-declining-balance method, depreciation is 2. Show the airplane's book value at the end of the first year under each method. Units-of- Production Less: Book Value for 2020 and Straight-Line for 2020 and for 2021. for 2021. C Double-Declining- Balance for 2021. Requirements 1. Compute AmerEx's depreciation for the first two years on the plane using the following methods: a. Straight-line method b. Units-of-production method (round depreciation per mile to the closest cent) c. Double-declining-balance method 2. Show the airplane's book value at the end of the first year under each depreciation method. Print Done - X
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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Transcribed Image Text:On January 1, 2020, AmerEx Transportation Company purchased a used aircraft at a cost of $51,000,000. AmerEx expects the plane to remain useful for five years (7,000,000 miles) and to have a residual value of $5,000,000. AmerEx expects to
fly the plane 925,000 miles the first year, 1,250,000 miles each year during the second, third, and fourth years, and 2,325,000 miles the last year.
Read the requirements.
1. Compute AmerEx'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
b. Units-of-production method (Round the depreciation per unit of output to two decimal places to compute your final answers.)
Using the units-of-production method, depreciation is
for 2020 and
c. Double-declining balance method
Book Value:
Using the double-declining-balance method, depreciation is
2. Show the airplane's book value at the end of the first year under each method.
Units-of-
Production
Less:
Book Value
for 2020 and
Straight-Line
for 2020 and
for 2021.
for 2021.
C
Double-Declining-
Balance
for 2021.
Requirements
1. Compute AmerEx's depreciation for the first two years on the plane using the
following methods:
a. Straight-line method
b. Units-of-production method (round depreciation per mile to the
closest cent)
c. Double-declining-balance method
2. Show the airplane's book value at the end of the first year under each
depreciation method.
Print
Done
- X
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