Exercise 9-19 (Part Level Submission) Whippet Bus Lines uses the units-of-activi

Question

Exercise 9-19 (Part Level Submission) 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 $100,000. Over its 4-year useful life, the bus is expected to be driven 160,000 miles. Salvage value is expected to be $8,000 ? (a) Your answer is correct. Compute the depreciation cost per unit. (Round answer to 3 decimal places, e.g. 6.251) Depreciation cost per unit 575 SHOW SOLUTION SHOW ANSWER LINK TO TEXT VIDEO: APPLIED SKILLS Attempts: 1 of 3 used

Explanation / Answer

Calculation of depreciation cost per mile =

cost value- residual value/expected driven miles

= $100000-8000/160000= .575 per mile

Book value at the end of the year:

We are maintaining accumulated depreciation account,so depreciation transferred to accumulated depreciation.

Book value shown at cost price.at the End of the year 2020 this accumulated depreciation transferred to asset account.

Years computation annual depreciation expense end of year end of year Units of activity * depreciation cost per unit Accumulated depreciation book value 2017 40000*.575 23000 23000 100000 2018 52000*.575 29900 52900 100000 2019 41000*.575 23575 76475 100000 2020 27000*.575 15525 92000 8000

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