On January 1, 2020, Best Shipping Transportation Company purchased a used aircraft at a cost of $50,400,000. Best Shipping expects the plane to remain useful for

five years (6,800,000 miles) and to have a residual value of $6,400,000. Best Shipping expects to fly the plane 800,000 miles the first year, 1,425,000

miles each year during the second, third, and fourth years, and 1,725,000 miles the last year. Read the requirements

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1.

Compute

Best Shipping's

depreciation for the first two years on the plane using the following methods:

a.	Straight-line method
b.	Units-of-production method (round depreciation per mile to the closest cent)
c.	Double-declining-balance method

2.

Show the airplane's book value at the end of the first year under each depreciation method.

.

1. Compute

Best Shipping's

depreciation for the first two years on the plane using the straight-line method, the units-of-production method, and the double-declining balance method.

a. Straight-line method

Using the straight-line method, depreciation is

for 2020 and

for 2021.

b. Units-of-production method (Round the depreciation per unit of output to two decimal places to compute your final answers.)

Using the units-of-production method, depreciation is

for 2020 and

for 2021.

c. Double-declining balance method

Using the double-declining-balance method, depreciation is

for 2020 and

for 2021.

2. Show the airplane's book value at the end of the first year under each method.

Book Value:		Straight-Line
Less:
Book Value

Units-of-

Production

Double-Declining-

Balance