At the starting of the year, Fun Ships cruises line purchased a cruise ship at a cost of $55 million. Fun Ships expects the ship to remain useful for 10-years (1,000,000 miles) and to encompass a residual value of $5 million.
Fun Ships puts 80,000 miles on the ship the first year and 115,000 miles the second year.
Requirements:
a) Calculate Fun Ships' first and second year depreciation on the cruise ship by using the given methods:
Straight-line Units-of-production Double declining balance.