Problem 9-2A (Part Level Submission) Bus Acquired Cost Salvage Value Useful Life

Question

Problem 9-2A (Part Level Submission)

Bus

Acquired

Cost

Salvage
Value

Useful Life
in Years

Depreciation
Method

(a1)

per mile

B. Compute the amount of accumulated depreciation on each bus at December 31, 2017. (round to 2 decimal places)

C. If bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in 2015 and 2016?( round to 2 decimal places)

Problem 9-2A (Part Level Submission)

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.

Bus

Acquired

Cost

Salvage
Value

Useful Life
in Years

Depreciation
Method

1 1/1/15 $ 98,300 $ 7,000 5 Straight-line 2 1/1/15 118,000 10,000 4 Declining-balance 3 1/1/16 88,640 8,000 4 Units-of-activity
For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 126,000. Actual miles of use in the first 3 years were 2016, 24,000; 2017, 31,500; and 2018, 30,000.

Explanation / Answer

Solution:

1.

2.

Bus 1

Bus 2

Bus 3

Purchase price of machine 88,640 Less: Salvage value 8,000 Depreciable base 80,640 Total miles for life of machine 126,000 Per mile depreciation expense - $ 80,460 / 126,000 miles 0.64

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