Upper A Celty Airline jet costs $ 28 comma 000 comma 000 and is expected to fly 200 comma 000 comma 000 miles during its 10-year life. Residual value is expected to be zero because the plane was used when acquired. If the plane travels 1 comma 000 comma 000 miles the first year, how much depreciation should Celty Airline record under the units-of-production method? (Round the depreciation per unit to two decimal places.)

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zagreb zagreb · Answer 1 · 2019-12-14T16:08:43+01:00

Answer:

$140,000

Explanation:

Cost = $28,000,000

Residual value = $0

Expected miles = 200,000,000

Flying miles (year 1) = 1,000,000

Now,

Depreciation per hour = [tex]\frac{Cost-Residual Value}{Expected miles}[/tex]

Depreciation per hour = [tex]\frac{28,000,000 - 0}{200,000,000}[/tex]

Depreciation per hour = [tex]\frac{28,000,000}{200,000,000}[/tex]

Depreciation per hour = $0.14

Depreciation expense (year 1) = Depreciation per hour × Working hours (year 1)

Depreciation expense (year 1) = $0.14 × 1,000,000

Depreciation expense (year 1) = $140,000