Assume that on September 30, 2013, Lufthansa, the national airline of Germany, purchased a Jumbo aircraft at a cost of €41,000,000 (€ is the symbol for the euro). Lufthansa expects the plane to remain useful for four years (5,200,000 miles) and to have a residual value of €5,200,000. Lufthansa will fly the plane 390,000 miles during the remainder of 2013. Compute Lufthansa’s depreciation on the plane for the year ended December 31, 2013, using the following methods:
a. Straight-line
b. Units-of-production
c. Double-declining-balance
Which method would produce the highest net income for 2013? Which method produces the lowest net income?

  • CreatedJuly 25, 2014
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