An United Trans Service jet costs $42,000,000 and is expected to fly 350,000,000

Question

An United Trans Service jet costs $42,000,000 and is expected to fly 350,000,000 miles during its 10-year life. Residual value is expected to be zero because the plane was used when acquired if the plane travels 29,000,000 miles the first year, how much depreciation should United Trans Service record under the units of production method? (Round the depreciation per unit to two decimal places) O A. $3,480000 O B. $4,200,000 ?. $8,400,000 O D. Cannot be determined from the dala given Click to select your answer. O Type here to search

Explanation / Answer

Depreciation = (Total Cost / Total Expected Distance)*Distance travelled in 1st Year

Depreciation for 1st Year = ($42,000,000 / 350,000,000)*29,000,000

= 0.12 * 29,000,000

=$3,480,000 (Option A)

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