Question

At the beginning of the year, Orbit Airways purchased a used Boeing aircraft at a cost of $45 million. Orbit Airways expects the plane to remain useful for five years (3 million kilometers) and to have a residual value of $5 million. Orbit Airways expects the plane to be flown 750,000 kilometers the first year and 1.5 million kilometers the second year. Compute Orbit Airways’ first-year depreciation 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 under the straight-line method.


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  • CreatedJuly 08, 2015
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