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babymother [125]
3 years ago
12

Computing first-year depreciation and book value At the beginning of the year, Austin Airlines purchased a used airplane for $33

,500,000. Austin Airlines expects the plane to remain useful for five years (4,000,000 miles) and to have a residual value of $5,500,000. The company expects the plane to be flown 1,100,000 miles during the first year.
Requirements
1. Compute Austin first-year depreciation expense on the plane using the following methods: a. Straight-line
b. Units-of-production
c. Double-declining-balance
2. Show the airplane’s book value at the end of the first.
Business
1 answer:
irakobra [83]3 years ago
5 0

Answer:

1. a. $560,000

  b. $13,400,000

  c. $7,700,000

Explanation:

The computation of the depreciation expense and the year end book value for the first year is shown below:

a) Straight-line method:

= (Purchase value of airplane - residual value) ÷ (useful life)

= ($33,500,000 - $5,500,000) ÷ (5 years)

= ($28,000,000) ÷ (5 years)  

= $560,000

In this, the depreciation expense is same for all the remaining useful life

(b) Double-declining balance method:

First we have to find the depreciation rate which is shown below:

= Percentage ÷ useful life

= 100 ÷ 5

= 20%

Now the rate is double So, 40%

In year 1, the original cost is $33,500,000, so the depreciation is $13,400,000 after applying the 40% depreciation rate

(c) Units-of-production method:

= (Purchase value of airplane - residual value) ÷ (estimated miles)  

= ($33,500,000 - $5,500,000) ÷ ($4,000,000 miles)

= ($28,000,000) ÷ ($4,000,000 miles)  

= $7 per miles

Now for the first year, it would be  

= Expected miles in first year × depreciation per miles

= 1,100,000 miles × $7 per miles

= $7,700,000

Now the book value would be

Straight-line method:

= Acquired value of a plain - accumulated depreciation  

= $33,500,000  -  $560,000

= $32,940,000

Double-declining balance method:

= Acquired value of a plain - accumulated depreciation  

= $33,500,000  - $13,400,000

= $20,100,000

Units-of-production method:

= Acquired value of a plain - accumulated depreciation  

= $33,500,000  - $7,700,000

= $25,800,000

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Campbell Co. has net sales revenue of $1,320,000, cost of goods sold of $760,700, and all other expenses of $297,000. The beginn
olasank [31]

Answer:

3.46

Explanation:

Calculation for Campbell Co. fixed asset turnover ratio

First step is to find the Average net fixed assets

Using this formula

Average Fixed assets= Fixed assets Beginning balance +Fixed assets ending balance /2

Let plug in the formula

Average Fixed assets= $368,000 + $396,000/ 2

Average Fixed assets=$764,000/2

Average Fixed assets=$382,000

Second step is to calculate for the Fixed asset turnover

Using this formula

Fixed asset turnover = Net revenue ÷ Average net fixed assets

Let plug in the formula

Fixed asset turnover= $1,320,000 ÷ $382,000

Fixed asset turnover= 3.46

Therefore Campbell Co. fixed asset turnover ratio will be 3.46

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3 years ago
How do you make a deposit form?
Anna11 [10]
A deposit is a sum of money placed or kept in a bank account, usually to gain interest
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3 years ago
The productivity gains achieved by specialization are due to A. comparative advantage. B. lower opportunity costs from switching
Ronch [10]

Answer:

Comparative advantage.

Explanation:

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Specialization is about concentrating on producing a few products in order to

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3 years ago
Read 2 more answers
What are 2 characteristics for intellectual property rights? (in Entrepreneurship)​
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<h2>Copyright Protection </h2>
  • A copyright will protect the following categories of works:

literary works

  • musical works, including any accompanying words
  • dramatic works, including any accompanying music
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  • pictorial, graphic and sculptural works
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Patents protect processes, methods and inventions that are "novel," "non-obvious" and "useful." If granted, a patent gives you a 20-year monopoly on selling, using, making or importing an invention into the United States.

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3 years ago
The following accounts were taken from the Adjusted Trial Balance columns of the work sheet: Accumulated Depreciation $3,200 Fee
koban [17]

Answer:

$12,100

Explanation:

Data provided;

Accumulated Depreciation = $3,200

Fees Earned = $17,400

Depreciation expense = $1,300

Insurance Expense = $200

Prepaid Insurance = $4,800

Supplies = $900

Supplies Expense = $3,800

Now,

The Net income

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= $17,400 - $1,300 - $200 - $3,800

= $12,100

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3 years ago
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