Exercise 9-19 Whippet Bus Lines uses the units-of-activity method in depreciatin

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 $117,000. Over its 4-year useful life, the bus is expected to be driven 210,000 miles. Salvage value is expected to be $7,800. Compute the depreciation cost per unit. (Round answer to 3 decimal places, e.g. 6.251) Depreciation cost per unit LINK TO TEXT VIDEO: APPLIED SKILLS Prepare a depreciation schedule assuming actual mileage was: 2017, 46,800; 2018, 60,840; 2019, 47,970; and 2020, 31,590. (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 x Depreciation Cost/Unit Annual Depreciation Expense Accumulated Depreciation Book Value 2017 2018 2019 2020 LINK TO TEXT IDEO: APPLTED SKILLS

Explanation / Answer

Depreciation cost per mile = (117000-7800/210000) = 0.52 per mile

Depreciation schedule :

Computation End of year Years Units of activity * Depreciation cost/Unit = Annual depreciation expense Accumlate depreciation Book value 2017 46800 * 0.52 = 24336 24336 92664 2018 60840 * 0.52 = 31637 55973 61027 2019 47970 * 0.52 = 24944 80917 36083 2020 28283 109200 7800

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