On January 1, 2020, QuickAir Transportation Company purchased a used aircraft at a cost of $52,400,000. QuickAir expects the plane to remain useful for five years (8,500,000 miles) and to have a residual value of $4,400,000. QuickAir expects to fly the plane 725,000 miles the first year, 1,325,000 miles each year during the second, third, and fourth years, and 1,800,000 miles the last year. (Click the icon to view the first year depreciation amounts under each method.) Read the requirements. 1. Which depreciation method offers the highest tax advantage for the first year? Describe the nature of the tax advantage. The double-declining-balance method offers the tax advantage for the first year of the asset's use. The advantage results from the greater amount of depreciation (versus the other methods) in the first year. This method also produces the fastest tax deductions and conserves cash that the taxpayer can invest to earn more income. 2. How much income tax will QuickAir save for the first year of the airplane's use under the method you just selected as compared with using the straight-line depreciation method? The company's income tax rate is 42%. Ignore any earnings from investing the extra cash. (Round the depreciation rates to two decimal places. Round your final answers to the nearest whole dollar.) Compute the tax savings: Double-declining-balance depreciation Less: Straight-line depreciation Excess depreciation tax deduction Income tax rate Income tax savings for first year 42%

(cilick the icon to vew the first year deprecinilion amounts under each mothod) Fead the reavicements 1. Which degreciaton method oflen the Nighest tax advantage for the firt yean Describe the nuture of the lar advantage: The method ofers the tak advantige for the frnt year of the assefs uMe The advantage results tram the amount of decrecation (versus the other methods) in the lint year. Tha mebiod aho produces the cavi that ihe tavpyer can invest to eam more income