Question

# Exercise 9-19 Whippet Bus Lines uses the units-of-activity method in depreciating its buses. One bus was...

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

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

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