Assume that on September 30, 20X4, Swissair, the national airline of Switzerland, purchased an Airbus aircraft at

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Assume that on September 30, 20X4, Swissair, the national airline of Switzerland, purchased an Airbus aircraft at a cost of €40,000,000 (€ is the symbol for the euro). Swissair expects the plane to remain useful for 7 years (5,000,000 miles) and to have a residual value of €5,000,000. Swissair will fly the plane 400,000 miles during the remainder of 20X4. Compute Swissair's depreciation on the plane for the year ended December 31, 20X4, using the following methods:

a. Straight-line

b. Units-of-production

c. Double-declining-balance

Which method would produce the highest net income for 20X4? Which method produces the lowest net income?

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Financial Accounting

ISBN: 978-0135012840

7th edition

Authors: Walter T. Harrison, Charles T. Horngren

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