At the beginning of the year, Logan Services purchased a used airplane for $65,000,000. Logan Services expects the plane to remain useful for 4 years (6 million miles) and to have a residual value of $5,000,000. The company expects the plane to be flown 1.3 million miles the first year.
1. Compute Logan Services' first year depreciation 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 under the straight-line method.