Question

On January​ 1, 2018​, Alaska Freight Airlines purchased a used airplane for $ 44 comma 000 comma 000. Alaska Freight Airlines expects the plane to remain useful for five years ​(4 comma 000 comma 000 ​miles) and to have a residual value of $ 4 comma 000 comma 000. The company expects the plane to be flown 1 comma 100 comma 000 miles the first year. Read the requirementsLOADING.... Requirement 1a. Compute Alaska Freight Airlines​'s ​first-year depreciation expense on the plane using the​ straight-line method. Begin by selecting the formula to calculate the​ company's first-year depreciation expense on the plane using the​ straight-line method. Then enter the amounts and calculate the depreciation for the first year.

Answer 1

The depreciation expense for the first year is $8,000,000

Step-by-step explanation:

Depreciation: The depreciation is an expense which reduce the value of the fixed assets due to tear and wear, usage, obsolesce, etc. It is shown under the income statement in the debit side and the accumulated depreciation would be shown in the asset side of the balance sheet. It is deducted from the ending value of the fixed assets.

The formula to compute the depreciation expense under straight line method is shown below:

=
`((original\ cost-salvage\ value))/((useful\ life))`

=
`((\$ 44,000,000-\$ 4,000,000))/((4\ years))`

= $8,000,000

In straight line method, the depreciation expense would remain same over the useful life i.e 4 years.

And, we do not consider the miles so we ignored it.