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In early 2018, Air Canada purchased a used aircraft for a cost of $46,000,000 and...

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Accounting

In early 2018, Air Canada purchased a used aircraft for a cost of $46,000,000 and expects it to remain in operation for 8 more years (5,000,000 miles), at the end of which it will have a residual value of $6,000,000. It is also expected to perform maintenance in the second year at a cost of $500,000. For the first year it is expected to fly 1,300,000 miles and 1,000,000 more, for the following 2 years. Calculate the depreciation expense for the third year (2020) using the following methods:

  1. Straight-line
  2. Units-of-production
  3. Double-declining-balance

2. Calculate the balance of accumulated depreciation at the end of the second year by the three methods. Show the entire procedure performed and formulas used.

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