On January 1, 2018, Gibson Corporation entered into a four-year operating lease. The payments were as follows: $20,000 for 2018,
1 answer:
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Answer:
A.7,650,000
B.2,677,500
C.17,000,000
Explanation:
DATA:
purchase cost = 42,500,000
Useful life = 5 years
Estimated useful life in miles = 5,000,000 miles
Salvage value = 4,250,000
Actual useful life in miles = 350,000miles
Solution
A. Depreciation (straight-line)=
Depreciation( straight-line)=
Depreciation( straight-line)= 7,650,000
B Depreciation (units of production)= (cost-Salvage value) x
Depreciation (units of production)= (42,500,000-4,250,000)x
Depreciation (units of production) = 2,677,500
C. Depreciation (Double declining) = 2 x cost x depreciation rate
Depreciation (Double declining) = 2 x 42,500,000 x 0.2(w)
Depreciation (Double declining) = 17,000,000
Working
Depreciation Rate = 1/Useful
Depeciation Rate = 1/ 05 = 0.2