Module 1 At the beginning of the year, Fun Ships cruises line purchased a cruise ship at a cost of

At the beginning 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 have 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:

Compute Fun Ships' first and second year depreciation on the cruise ship using the following methods:

1. Straight-line
2. Units-of-production
3. Double declining balance