On May 22, 2018, for the purpose of transporting company officials to remote location, Oil & Gas Ltd. purchased a small airplane costing $120,000 and paid $20,000 for painting and lettering.

The company paid $25,000 in cash and signed a one-year notes payable for the balance.

The airplane is expected to have a useful life of 16 years or 1,500,000 kilometers, with a salvage value of $20,000.

Required

1. Calculate the cost of the airplane and prepare a journal entry

2. Compute depreciation expense for the year ended December 31, 2018, assuming the company uses the straight-line method of depreciation and prepare a journal entry
3. Compute depreciation expense for the year ended December 31, 2018, assuming the company uses the double-declining-balance method of depreciation and prepare a journal entry
4. Compute depreciation expense for the year ended December 31, 2018, assuming the company uses the units-of-production method of depreciation and that the airplane was flown 96,000 kilometers during the year and prepare a journal entry
5. During 2020, management has decided that, as a result of heavy usage, the total life of the airplane would only be 13 years instead of the original estimate of 16 years. The salvage value was expected to be $15,000 at the end of the airplanes useful life. Revise the depreciation expense for the year ended December 31, 2020, assuming the company uses the straight-line method of depreciation, and prepare a journal entry