Double-declining balance switching to straight-line

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1. The Chilean flagship carrier LAN agreed to purchase a number of Boeing 787-8 Dreamliner aircraft to increase its fleet. Assume one jet costs $280 million and can be depreciated over 6 years. If 1.5-declining balance switching to straight-line is used, what is the depreciation amount in year 5?

$52.5 million

$29.5 million

$47.0 million

$39.4 million

2. Which of the following statements is false? (When DB and switching DB are compared, assume that they have the same n and alpha parameters. Assume that SL depreciation has zero salvage value.)

A) Double-declining balance switching to straight-line depreciation defines a book value at the end of the recovery period that is greater than that of straight-line depreciation.

B) Double-declining balance switching to straight-line depreciation defines a lesser book value at the end of the recovery period than double-declining balance depreciation.

C) Double-declining balance switching to straight-line depreciation defines a lesser amount of depreciation in the final year than straight-line depreciation.

D) Double-declining balance switching to straight-line depreciation defines an equal amount of depreciation in the first year when compared to double-declining balance depreciation.

Reference no: EM131889781

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