For Questions 1-3, use the following scenario: 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. 1. Calculate depreciation expense and book value for Airways Corp. for the first 3 years. Year Straight-line Double-Declining-Balance Depreciation Book Value at Depreciation Book Value at Expense End of Year Expense End of Year 1 2 3 2. If Airways sells the asset for $50,000 after depreciation expense is recorded for year 2, what is the gain or loss on the sale? Straight-line Double-Declining Balance $ Amount $ Amount (show as (show as positive Indicate if it's a positive Indicate if it's a number) gain or loss number) gain or loss 3. Alternatively, if Airway doesn't sell the asset but discovers that the fair value of the asset is $40,000 at the very beginning of the fourth year, what is the impairment loss recognized? Double Declining Straight-line Balance 6 7 For Questions 4-6, fill in the following amounts from the Depreciation at Delta Airlines and Singapore Airlines 8 Case. 4. In the highlighted cells, indicate the useful life and salvage value percentage. Then calculate the annual depreciation expense that Delta and Singapore would record for each $100 of aircraft cost. For example, if salvage value was 4% of cost and the useful life was 4 years then the calculation would be (100 - (100*.04)/4 years = 24. Your answer is the percentage of aircraft cost depreciated each year (e.g., 24%), which allows you 9 to compare firms with different S amounts of aircraft. 0 Delta Delta Delta Singapore Singapore 7/1/86 to 1 Prior 7/1/86 3/31/93 4/1/93 on Prior 4/1/89 4/1/89 on 2 Useful Life in years Salvage Value as a percentage of cost (4 3 percent is stated as .04) Depreciation stated as a