Yello Bus Lines uses the units-of-activity method in depreciating its buses. One
ID: 2451510 • Letter: Y
Question
Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2015, at a cost of $222,655. Over its 7-year useful life, the bus is expected to be driven 148,700 miles. Salvage value is expected to be $7,040.
1.) Compute the depreciable cost per unit. (Round answer to 2 decimal places)
2.) Prepare a depreciation schedule assuming actual mileage was: 2015, 36,600; 2016, 43,500; 2017, 37,900; and 2018, 30,700. (Round cost per unit to 2 decimal places, e.g. 15.25 and all other answers to 0 decimal places, e.g. 5,275.)
Computation
End of Year
Year
Units of
Activity
Depreciation
Cost/Unit
Annual
Depreciation
Expense
Accumulated
Depreciation
Book
Value
Computation
End of Year
Year
Units of
Activity
Depreciation
Cost/Unit
Annual
Depreciation
Expense
Accumulated
Depreciation
Book
Value
Explanation / Answer
Depreciation = (Number of Units Produced/ Life in number of units) * (Cost Salvage Value)
1) deprection Cost per unit = (Cost - salavage value)/ life in number of units
= (222655-7040)/148700 miles
= 1.45 per mile
Computation End of year year units of activity * Deprection cost per unit = Annual Deprection Expenses Accumulated Deprection Book value 2015 36600 1.45 $53,070 $53,070 $169,585 2016 43500 1.45 $63,075 $116,145 $106,510 2017 37900 1.45 $54,955 $171,100 $51,555 2018 30700 1.45 $44,515 $215,615 $7,040Related Questions
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