uni rd gandt, Fi gerial Accounting, 2e me: 08:36 PM/ Exercise 9-5 Yello Bus Line
ID: 2543582 • Letter: U
Question
uni rd gandt, Fi gerial Accounting, 2e me: 08:36 PM/ Exercise 9-5 Yello Bus Lines uses units-of-a useful life, the bus is expected to be driven 161,700 miles. Salvage value is expected to be $8,500. s the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2017, at a cost of $260.752. Over its 4-year (Round answer to 2 decimal places, eg. o.so) Your schedule assuming actual mileage was: 2017, 28,700; 2018, 56,000; 2019, 42,000; and 2020, 35,000. (Round cost per unit to 2 to 0 decimal plac" 6@ s,273', Units of Cost /Unit Accumulated ation 2018 2019 2020 4Explanation / Answer
Depreciation cost per unit = $1.56 per mile
Explanation;
Cost of Bus = $260752
Salvage value = $8500
Expected miles to be driven = 161700 miles
Formula of depreciation is as follow;
Depreciation per mile = (Cost of Bus – Salvage value) / Total miles to be driven
Now let’s put the values in above given formula;
Depreciation cost per unit ($260752 – $8500) / 161700
= $1.56 per mile
Year
Units of activity
Depreciation cost per unit
Annual depreciation expense
Accumulated depreciation
Book value
2017
28700
$1.56
$44772
$44772
($260752 - $44772) = $215980
2018
56000
$1.56
$87360
$132132
($260752 - $132132) = $128620
2019
42000
$1.56
$65520
$197652
($260752 - $197652) = $63100
2020
35000
$1.56
$54600
$252252
($260752 - $252252) = $8500 (This is equal to salvage value)
Year
Units of activity
Depreciation cost per unit
Annual depreciation expense
Accumulated depreciation
Book value
2017
28700
$1.56
$44772
$44772
($260752 - $44772) = $215980
2018
56000
$1.56
$87360
$132132
($260752 - $132132) = $128620
2019
42000
$1.56
$65520
$197652
($260752 - $197652) = $63100
2020
35000
$1.56
$54600
$252252
($260752 - $252252) = $8500 (This is equal to salvage value)
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