Airways Corp plans to buy a new asset for $95,000, and the cost to move it...

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Airways Corp plans to buy a new asset for $95,000, and the cost to move it to the airport where it will be used is $5,000. The estimated economic life of the asset is 5 years and managers have estimated the salvage value is $20,000. a. How much depreciation expense will Airways report in each of the first 3 years if they use straight-line vs. double-declining balance method and what is the book value at the end of each year? b. If they sell the asset for $50,000 after depreciation in year 2 is recorded, what is the gain and loss on the sale if they use the straight-line vs. double-declining balance method? Demonstrate that the net amount of expense equals out for each method. c. Alternatively, what if they keep the asset and at the very beginning of year 4 they discover that the fair value of the asset is $40,000? What is the impairment loss that is recorded under the straight-line vs. double declining balance method? Airways Corp plans to buy a new asset for $95,000, and the cost to move it to the airport where it will be used is $5,000. The estimated economic life of the asset is 5 years and managers have estimated the salvage value is $20,000. a. How much depreciation expense will Airways report in each of the first 3 years if they use straight-line vs. double-declining balance method and what is the book value at the end of each year? b. If they sell the asset for $50,000 after depreciation in year 2 is recorded, what is the gain and loss on the sale if they use the straight-line vs. double-declining balance method? Demonstrate that the net amount of expense equals out for each method. c. Alternatively, what if they keep the asset and at the very beginning of year 4 they discover that the fair value of the asset is $40,000? What is the impairment loss that is recorded under the straight-line vs. double declining balance method?

Answer rating: 100% (QA)

a Straightline method The depreciation expense for each year would be 95000 20000 5 15000 The book v... View the full answer