Brief Exercise 9-14 Kwik Taxi Service uses the units-of-activity method in compu

Question

Brief Exercise 9-14 Kwik Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 148,000 miles. Taxi 10 cost $20,900 and is expected to have a salvage value of $600. Taxi 10 was driven 33,000 miles in 2016 and 30,900 miles in 2017 Determine the depreciation cost. (Round answer to 2 decimal places, e.g. 1.25.) Depreciable cost $ per unit SHOW SOLUTION Compute the depreciation for each year. (Round answers to O decimal places, e.g. 125.) 2016 2017 Depreciation expenses SHOW SOLUTION

Explanation / Answer

Depreciable cost=(20900-600)/148000= $0.14 per unit Depreciation expense: 2016 4620 =33000*0.14 2017 4326 =30900*0.14 2 Depreciable cost per unit=(125000-8400)/220000= $0.53 Years Units of activity Depreciable cost/unit Annual depreciation expense Accumulated depreciation Book value 2017 50000 0.53 26500 26500 98500 2018 65000 0.53 34450 60950 64050 2019 51250 0.53 27163 88113 36887 2020 33750 0.53 28487 116600 8400

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