Settings Upper AA Canada TranCanada Tran jet costs $ 52 comma 000 comma 000$52,0

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Upper AA

Canada TranCanada Tran

jet costs

$ 52 comma 000 comma 000$52,000,000

and is expected to fly

400 comma 000 comma 000400,000,000

miles during its

88?-year

life. Residual value is expected to be zero because the plane was used when acquired. If the plane travels

30 comma 000 comma 00030,000,000

miles the first? year, how much depreciation should

Canada TranCanada Tran

record under the? units-of-production method? ?(Round the depreciation per unit to two decimal? places.)

A.

$ 13 comma 000 comma 000$13,000,000

B.

$ 6 comma 500 comma 000$6,500,000

C.

$ 3 comma 900 comma 000$3,900,000

D.

Cannot be determined from the data given

Explanation / Answer

Depreciation per unit = 52000000/400000000 = 0.13 per unit

Depreciation for first year = 30000000*0.13 = 3900000

so answer is c) 3,900,000

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