Whippet Bus Lines uses the units-of-activity method in depreciating its buses. O
ID: 2571881 • Letter: W
Question
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 $119,000. Over its 4-year useful life, the bus is expected to be driven 210,000 miles. Salvage value is expected to be $7,700.
Prepare all adjusting entries at December 31 to record amortization required by the events. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Compute the depreciation cost per unit. (Round answer to 3 decimal places, e.g. 6.251)
Computation
End of Year
Years
Units of Activity
Depreciation Cost/Unit
Annual Depreciation Expense
Accumulated Depreciation
Book Value
Depreciation cost per unit $ Prepare a depreciation schedule assuming actual mileage was: 2017, 47,600; 2018, 61,880; 2019, 48,790; and 2020, 32,130. (Round depreciation cost per unit to 3 decimal places, e.g. 0.125 and other answers to 0 decimal places, e.g. 125)Computation
End of Year
Years
Units of Activity
×Depreciation Cost/Unit
=Annual Depreciation Expense
Accumulated Depreciation
Book Value
2017 $ $ $ $ 2018 2019 2020Explanation / Answer
Solution :
End of Year Computation Years Units of Activity × Depreciation Cost/Unit = Annual Depreciation Expense Accumulated Depreciation last year book value Book Value (a) (b) ( c ) (d) ( e) ( f) (note given below) ( a * b) ( d + c) ( e - c) 2017 47600 0.53 25,228 25,228 119,000 93,772 2018 61880 0.53 32,796 58,024 93,772 60,976 2019 48790 0.53 25,859 83,883 60,976 35,117 2020 32130 0.53 17,029 100,912 35,117 18,088 Note : actual depreciation 1,11,300 (1,19,000-7700 actual cost - salvage value) 0.530 (1,11,300/2,10,000) dep per mile column ( e )'s figure is brought out from last years closing figures of book value. It used to take it as opening book value for current year and than reduce current depreciation from it.Related Questions
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