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Part 1

At the beginning of the year, Fun Ships cruise line purschased a cruise ship at a cost of $55 million.


Fun Ship expects the ship to remain useful for 10 yrs (1,000,000 miles) and to have residual value of $5 million.


Fun ships puts 80,000 miles on the ship the first year and 115,000 miles the second year. Compute Fun Ships first and second year depreciation on the cruise ship using the following methods.


2. Units of Production

3. Double declining balance


Part 2

Fun Ships decided to discard it’s ship at the end of 4yrs.  When its cost was $55 million and it had acumulated depreciation of $20 million. Record the disposition of the ship under the following independent situtions.

1.Fun Ship’s sold the ship for $37 million

2. Fun ship’s sold the ship for $37 millio

3. Fun ship traded in the ship for a new similar ship with a list price of $120 million. Fun ships was given $15 million as a trade-in allowence and paid cash for the balance.

4. Fun ships traded in the asset for a new similar assest with a list price of $200 million.  Fun ships was given a trade-in allowence of $50 million and signed a note payable for te reminder.




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