Prof.Dr. Taylan ALTINTAS Vanuatu Airline Company-1 On January 1, 2016, Vanuatu Airline Company purchases an airplane for $18,000,000 to use it in its operations. The Chief Financial Officer of the company considers the alternatives of the depreciation methods. The estimated useful life of the plane ise 10 years. The residual value of the airplane at the end of the useful life is expected as $10,000,000. The estimated units of useful life is miles. Miles to be flown each year are given below: Year 1 Yearly Flight Lin miles) 680.000 2 720,000 3 710,000 4 720,000 S 690,000 6 630.000 610,000 B 590,000 9 540.000 10 510,000 TOTAL 6,400,000 Bequired: a) Compute the depreciation expense for each year, the accumulated depreciation and the net book value of the airplane as of the end of each year for each depreciation method. Which depreciation method should be chosen for what reason? b) Assume that Vanuatu Airline Company decides to sell the airplane at the end of the 3. year for $11,000,000. Make the journal entry under each depreciation method. Vanuatu Airline Company-2 On September 1, 2016, Vanuatu Airline Company purchases an oiling machine used for maintenance of airplanes for $240,000. The Chief Financial Officer of the company considers the alternatives of the depreciation methods. The estimated useful life of the machine is 5. years. The residual value of the machine at the end of the useful life is immaterial. Required: a) Compute the yearly depreciation for each year under straight-line, double- declining balance and sum-of-the-years' digits methods of depreciation. Which depreciation method should be chosen for what reason? b) Assume that the maintanence department advises the management of Vanuatu Airline Company to sell this machine because it breaks down frequently and is not suitable to meet their needs. The company sells this machine on December 31, 2016 for $160,000. Make the joumal entry under each depreciation method mentioned above