In recent years, Avery Transportation purchased three used buses. Because of fre

Question

In recent years, Avery Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Information concerning the buses is summarized as follows Useful Life in Years Salvage Bus Acquired Value Method Cost $96,300 124,000 7,000 10,500 8,500 Straight-line Declining-balance Units-of-activity 87,380 For the declining-balance method, the company uses the double-declining rate. For the units-of- activity method, total miles are expected to be 116,000. Actual miles of use in the first 3 years were 2016, 25,000; 2017, 31,000; and 2018, 31,000. Your answer is correct. For Bus #3 , calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation expense 0.68 per mile Your answer is incorrect. Try again. Compute the amount of accumulated depreciation on each bus at December 31, 2017. (Round depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answers to 0 decimal places, eg. 2,125.) ccumulated de BUS 1 17860 BUS 2 35720 BUS 3 3580 Your answer is incorrect. Try again. If Bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2015 and (2) 2016? (Round answers to 0 decimal places, e.g. 2,125.) Depreciation expense 37200 71920

Explanation / Answer

Q1 Acquistion Cost of Bus 3: 87380 Less: Salvage Value 8500 Net Depreciable Value 78880 Total Activity Miles 87000 (25000+31000+31000) Depreciation Rate Per Mile 0.91 Q2 Bus 1: SLM Acquistion Cost 96300 Less: Salvage Value 7000 Net Depreciable Value 89300 Useful Life 5 Depreciation PA 17860 A Period Elapsed Till 2017 3 B Accumulated Depreciation 53580 A*B Bus 2: DDM Acquistion Cost 124000 Rate Of Depreciation 1/ Life Rate Of Depreciation 1/4 Rate Of Depreciation 25.00% Rate Of Depreciation-Double 50.00% Depreciation for Year 1-2015 62000 (124000*50%) Depreciation for Year 2-2016 31000 (124000-62000)*50% Depreciation for Year 3-2017 15500 (124000-62000-31000)*50% Accumulated Depreciation 108500 Bus 3: Activity Activity in 2016 25000 Activity in 2017 31000 Total Activity till 2017 56000 Depreciation Rate Per Mile 0.91 Accumulated Depreciation 50773 Q3 Bus 2: DDM Acquistion Cost 124000 Rate Of Depreciation 1/ Life Rate Of Depreciation 1/4 Rate Of Depreciation 25.00% Rate Of Depreciation-Double 50.00% Depreciation for Year 1-2015 46500 (124000*50%*9/12) Depreciation for Year 2-2016 38750 (124000-46500)*50%

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