On January 1, 2018, Advanced Airline purchased a used airplane at a cost of $60,500,000. Advanced Airline expects the plane to remain useful for eight years (5,000,000 miles) and to have a residual value of $5,500,000. Advanced Airline expects the plane to be flown 1,100,000 miles the first year and 1,200,000 miles the second year.

Requirements
1.​Compute first-year (2019) depreciation expense on the plane using the following methods:
a.​Straight-line
b.​Units-of-production
2.​Show the airplane’s book value at the end of the first year for the two methods.

Answer:

Results are below.

Explanation:

First, we need to calculate the annual depreciation using the straight-line method:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (60,500,000 - 5,500,000) / 8

Annual depreciation= $6,875,000

Now, using the units of production method:

Annual depreciation= [(original cost - salvage value)/useful life of production in miles]*miles operated

Annual depreciation= [(55,000,000 / 5,000,000)]*1,100,000

Annual depreciation= $12,100,000

Finally, the book value:

Book value= purchase price - accumulated depreciation

Straight-line:

Book value= 60,500,000 - 6,875,000= $53,625,000

Units-of-production:

Book value= 60,500,000 - 12,100,000=  $48,400,000

Addison, a human resource intern, was given an assignment by her manager that meant she must obtain information from other departments to complete it, but some departments refused to share information with an intern. Addison was frustrated because she did not have the power to get the information she needed. In the context of this situation, Addison's manager made the mistake of

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Discuss the negative impact of piracy on businesses.​

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Investments in unconsolidated affiliated companies Our investments in affiliated companies accounted for by the equity method consist primarily of a 50% interest in Shin Caterpillar Mitsubishi Ltd. (SCM) located in Japan. Combined financial information of the unconsolidated affiliated companies accounted for by the equity method (generally on a three-month lag, e.g., SCM results reflect the periods ending September 30) was as follows:

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Results of operations:
Sales $4,007 $4,420 $4,140
Cost of sales 3,210 3,526 3,257
Gross profit $797 $894 $883
Profit $157 $187 $161
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December 31 (Millions of Dollars) 2011 2010 2009
Financial position:
Assets
Current assets $2,062 $1,807 $1,714
Property, plant and equipment-net 1,286 1,119 1,120
Other assets 173 176 194
3,521 3,102 3,028
Liabilities
Current liabilities 1,546 1,394 1,348
Long-term debt due after one year 269 309 318
Other liabilities 393 145 188
2,208 1,848 1,854
Ownership $1,313 $1,254 $1,174

Ceterpillar's investment in unconsolidated affiliated
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Investment in equity method companies $576 $542 $540
Plus: Investment in cost method companies 16 20 25
Investment in unconsolidated affiliated companies $592 $562 $565

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Accounts receivable (net) $35,000 $35,000
Inventory 210,000 183,000
Fixed assets (net) 23,000 46,500
Other assets 10,000 16,000
Total Assets $278,000
Liabilities $72,000
Stockholders' equity 206,000

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