Question

Exercise 9-19 Whippet Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2017, at a cost of $129,000. Over its 4-year useful life, the bus is expected to be driven 216,250 miles. Salvage value is expected to be $7,900. Compute the depreciation cost per unit. (Round answer to 3 decimal places, e.g. 6.251) Depreciation cost per unit $enter the depreciation cost per unit in dollars rounded to 3 decimal places LINK TO TEXT Prepare a depreciation schedule assuming actual mileage was: 2017, 51,600; 2018, 67,080; 2019, 52,890; and 2020, 34,830. (Round depreciation cost per unit to 3 decimal places, e.g. 0.125 and other answers to 0 decimal places, e.g. 125) Computation End of Year Years Units of Activity × Depreciation Cost/Unit = Annual Depreciation Expense Accumulated Depreciation Book Value

Answer 1

Solution:

Cost of Bus = $129,000

Expected miles = 216,250

Salvage value = $7,900

Depreciation cost per unit of mile = (cost - salvage value) / expected miles = ($129000 - $7900) / 216250 = $0.56 per mile

	Computation						End Of Year
Years	Units of activity	*	Depreciation cost per unit	=	Annual Depreciation expense		Accumulated Depreciation	Book Value
2017	51600		$0.56		$28,896.00		$28,896.00	$1,00,104.00
2018	67080		$0.56		$37,564.80		$66,460.80	$62,539.20
2019	52890		$0.56		$29,618.40		$96,079.20	$32,920.80
2020					$25,020.80		$1,21,100.00	$7,900.00