P2. Phyllis Planes flies aircraft across the western United States. On January 1, Phyllis purchased...
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P2. Phyllis Planes flies aircraft across the western United States. On January 1, Phyllis purchased an aircraft for $2,500,000. Based on past experience and reliability information about the aircraft, Phyllis expects to keep the aircraft for 20 years. Over this time period, the plane is expected to travel almost 2,000,000 miles. Phyllis has read reports that many aircraft last up to 40 years if properly maintained. At the end of its useful life to the company, Phyllis estimates a resale value of approximately $1,000,000 for the aircraft. Calculate depreciation using the straight-line method. Determine the annual depreciation expense for the airplanes using the straight-line method; what is the amount of this expense? (You don't need to prepare a schedule.) Prepare the journal entry to record the first year of depreciation expense. . Calculate depreciation using the units-of-production method. Determine the annual depreciation expense for the airplanes using the units-of-production method, assuming that the plane is flown for 90,000 miles in year one. (You don't need to prepare a schedule or worry about the remaining years.) Prepare the journal entry to record the first year of depreciation expense
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