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Chapter 10 Homework Assignment

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Depreciation by units-of-activity Method

Prior to adjustment at the end of the year, the balance in Trucks is $320,500 and the balance in Accumulated Depreciation—Trucks is $38,043. 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	$60,600		$7,900		170,000	miles	—		26,000	miles
2	89,900		11,700		340,000		$743		27,000
3	50,100		4,100		230,000		10,600		41,000
4	119,900		17,400		250,000		26,700		50,000

a. 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 of the truck below its residual value. Round the rate per mile to two decimal places.

Truck No.	Rate per Mile (in cents)				Miles Operated			Credit to Accumulated Depreciation
1	$				26,000					$
2					27,000
3					41,000
4					50,000
Total										$

b. Journalize the entry to record depreciation for the year.

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Answer 1

a.	Rate per mile=(Cost-Estimated residual value)/Estimated useful life
	Amount to be credited to accumulated depreciation =Rate per mile*Miles operated
	Truck No.	Cost	Estimated Residual value	Depreciable value	Estimated useful life	Rate per mile	Miles operated	Credit to accumulated depreciation
		1	2	3=1-2	4	5=3/4	6	7=5*6
	1	60600	7900	52700	170000	0.31	26000	8060
	2	89900	11700	78200	340000	0.23	27000	6210
	3	50100	4100	46000	230000	0.20	41000	8200
	4	119900	17400	102500	250000	0.41	50000	20500
	Total							42970
b.	Entry to record depreciation:
	Date	General Journal				Debit	Credit
	xxxxx	Depreciation expense				42970
		Accumulated Depreciation—Trucks					42970