Question

the activity method of depreciation?

the activity method of depreciation?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Under activity method of depreciation, an asset's useful life is considered in the total units or activity that the asset is estimated to produce or perform. The asset's cost is then depreciated based on the units produced/activity performed by the asset. Under this method, years and partial years are irrelevant.

this method is also known as units of activity method or units of production method

example:

total expected units = 50000

units produced in year 1 = 5000

depreciable value = initial cost - salvage value

= $100000 - 12000 = $88000

Depreciation per annum = depreciable value x (units produced during the year/estimated total activity units)

Depreciation = $88000 x (5000/50000) = $8800

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Considering the three types of depreciation methods(straight-line method, double-declining method and units-of-activity depreciation method), briefly explain...
Considering the three types of depreciation methods(straight-line method, double-declining method and units-of-activity depreciation method), briefly explain the role of the matching principle in accounting for long-lived assets.
Sunland Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is...
Sunland Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 148,000 miles. Taxi no. 10 cost $38,000 and is expected to have a salvage value of $1,000. Taxi no. 10 is driven 28,500 miles in year 1 and 21,500 miles in year 2. a. Calculate depreciation cost per mile using unit-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation cost: $______ per mile b. Compute the depreciation for...
Splish Brothers Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab...
Splish Brothers Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 158,000 miles. Taxi no. 10 cost $35,000 and is expected to have a salvage value of $1,820. Taxi no. 10 is driven 28,500 miles in year 1 and 19,500 miles in year 2. (a1) Calculate depreciation cost per mile using unit-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation cost $___ per mile (b1) Determine the depreciation...
Please explain the activity method and the limitations of the activity method.
Please explain the activity method and the limitations of the activity method.
Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in...
Depreciation by units-of-activity MethodPrior to adjustment at the end of the year, the balance in Trucks is $404,700 and the balance in Accumulated Depreciation—Trucks is $121,940. Details of the subsidiary ledger are as follows:TruckNo.CostEstimatedResidualValueEstimatedUsefulLifeAccumulatedDepreciationat Beginningof YearMilesOperatedDuringYear1$80,000$12,000210,000miles—    31,500miles2117,20014,064300,000$23,440    30,000395,00013,300215,000$76,000    21,5004112,50013,500350,000$22,500    42,000a. Determine for each truck the depreciation rate per mile and the amount to be credited to the accumulated depreciation section of each subsidiary account for the miles operated during the current year. Keep in mind that the depreciation taken cannot reduce the book value...
Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in...
Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in Trucks is $405,200 and the balance in Accumulated Depreciation—Trucks is $119,340. Details of the subsidiary ledger are as follows: Truck No. Cost Estimated Residual Value Estimated Useful Life Accumulated Depreciation at Beginning of Year Miles Operated During Year 1 $81,500 $12,225 230,000 miles —     34,500 miles 2 112,700 13,524 290,000 $22,540     29,000 3 91,000 12,740 213,000 $72,800     21,300 4 120,000 14,400 270,000 $24,000     32,400...
Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in...
Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in Trucks is $416,400 and the balance in Accumulated Depreciation—Trucks is $123,980. Details of the subsidiary ledger are as follows: Truck No. Cost Estimated Residual Value Estimated Useful Life Accumulated Depreciation at Beginning of Year Miles Operated During Year 1 $83,000 $12,450 200,000 miles — 30,000 miles 2 115,400 13,848 410,000 $23,080 41,000 3 95,500 13,370 206,000 $76,400 20,600 4 122,500 14,700 410,000 $24,500 49,200...
Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in...
Depreciation by units-of-activity Method Prior to adjustment at the end of the year, the balance in Trucks is $400,300 and the balance in Accumulated Depreciation—Trucks is $124,060. Details of the subsidiary ledger are as follows: Truck No. Cost Estimated Residual Value Estimated Useful Life Accumulated Depreciation at Beginning of Year Miles Operated During Year 1 $77,000 $11,550 220,000 miles —     33,000 miles 2 111,800 13,416 330,000 $22,360     33,000 3 99,000 13,860 212,000 $79,200     21,200 4 112,500 13,500 320,000 $22,500     38,400...
D-Signs calculates depreciation expense using the units-of-activity method for a delivery van that originally cost $15,500....
D-Signs calculates depreciation expense using the units-of-activity method for a delivery van that originally cost $15,500. The van had an estimate of 100,000 miles of use, with a $2,000 residual value. As of the beginning of 20Y5, the van has been driven 92,000 miles. Before disposing of the asset on March 15, 20Y5, the company drives the van an additional 2,000 miles. Prepare the journal entries to record the depreciation for 20Y5 and the disposal of the asset.
Which depreciation method is the best method for a company to use? Why?
Which depreciation method is the best method for a company to use? Why?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT