Problems 8-56 Popular Depreciation Methods The 2011 annual report of Alaska Airlines contained the following footnote: PROPERTY, EQUIPMENT, AND DEPRECIATION-Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, which are as follows: Consider a Boeing 737-100 airplane that Alaska acquired for $50 million. Its useful life is 20 years, and its expected residual value is $6 million. Prepare a tabular comparison of the annual depreciation and book value for each of the first 3 years of service life under straightline and DDB depreciation. Show all amounts in thousands of dollars (rounded to the nearest thousand). (Note that this is a comparison of methods used for reporting to shareholders. Such methods may differ from those used for reporting to the income tax authorities.) Hint: See Exhibit 8-2 on page 348. EXHIBIT 8-2 Chang Company Depreciation: Two Popular Methods (assume equipment costs $41,000,4-year life, and estimated residual value of $1,000 ) *Depreciation is the same each year, 25% of ($41,000$1,000) (100%4)=25%. The DDB rate is 50%. Then 50% of $41,000;50% of ($41,000$20,500);50% of [$41,000($20,500+$10,250)]; etc. Unmodifie this method will not fully depreciate the existing book value. The depreciation schedule adjustment occurs in year 4 , and the depreciation amount is the amount needed to reduce the book value to the estimated salvage value