An entity bought a plane for 60000 euro and and it had a shipping cost of 2500. The firm expected to use it for 3 years and to sell plane for 2 500 euro at the end of it service life. During these 3 years of use, the company estimated to fly 100 000 miles in total on it. In the first year company estimates to fly 30 000 miles, second year 50 000, third year 20 000. What is sum of the depreciation expenses of the first two years?

The depreciation expenses of an asset represent the reduction in its value over time due to wear and tear or obsolescence, we need to calculate the sum of the depreciation expenses for the first two years of the plane's service life.

To find the depreciation expenses, we first need to determine the annual depreciation. The total depreciation over the 3-year period can be calculated by subtracting the expected resale value from the initial cost, which gives us 60000 - 2500 = 57500 euros.

Next, we divide the total depreciation by the total number of miles flown over the 3-year period to find the cost per mile of depreciation.

This is calculated as 57500 / 100000 = 0.575 euros per mile.

To find the depreciation expenses for each year, we multiply the cost per mile by the number of miles flown in that year.

In the first year, the company estimates to fly 30000 miles, so the depreciation expense for the first year is 0.575 * 30000 = 17250 euros.

In the second year, the company estimates to fly 50000 miles, so the depreciation expense for the second year is 0.575 * 50000 = 28750 euros.

Finally, to find the sum of the depreciation expenses for the first two years, we add the depreciation expenses of the first and second years:

17250 + 28750 = 46000 euros.

The sum of the depreciation expenses for the first two years is 46000 euros.

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