continuation of the EC9-4 exercise

c. EC9-4 (p.511) - Calculation of depreciation for the second year (14 points)

At the beginning of 2011, Texas Aero purchased a used aircraft for $ 59,000,000. Tex expects the aircraft to remain useful for 5 years or 6,000,000 million miles and have a residual value of $ 5,000,000. The company expects the plane to fly 1,400,000 million miles in the first year and 1,300,000 million miles in the second year.

Is required:

Data item Amount

Cost of the plane $ 59,000,000

Less: estimated residual value 5,000,000

Depreciable cost $ 54,000,000

Estimated useful life

Years 5

Units 6,000,000 million miles

1. Calculate the depreciation of the second year for Texas on the airplane using the following methods.

Straight line

Depreciation for the year

Date Cost of asset Depreciation rate Depreciable cost Depreciation expense Accumulated depreciation Book value

Year 1 59,000,000 .20

Year 2 59,000,000 .20

continuation of the EC9-4 exercise Production units Depreciation for the year Date Cost of asset Depreciation rate per unit Number of units Depreciation expense Accumulated depreciation Book value Year 1 $ 59,000,000 Year 2 59,000,000 Double declining balance Depreciation for the year Date Cost of asset Rate SDD Value Depreciation expense Accumulated depreciation Book value Year 1 $ 59,000,000 40 Year 2 59,000,000 .40 2 Calculate the balance (balance) in the cumulative depreciation account at the end of the second year, using the straight-line depreciation method