South Airlines purchased a 747 aircraft on January 1, 2019, at a cost of $35,000,000

Subject:BusinessPrice:2.84 Bought7

Share With

South Airlines purchased a 747 aircraft on January 1, 2019, at a cost of $35,000,000. The estimated useful life of the aircraft is 20 years, with an estimated salvage value of $5,000,000. On January 1, 2022 the airline revises the total estimated useful life to 15 years with a revised salvage value of $3,500,000.

 

(1)Compute the depreciation and book value at December 31, 2021 using the straight-line method and the double-declining-balance method.

 

(2)Assuming the straight-line method is used, compute the depreciation expense for the year ended December 31, 2022.