Problem 9-2A (Part Level Submission) In recent years, Avery Transportation purch

Question

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 Salvage Value Useful Life in Years 5 4 Depreciation Method Cost $97,700 123,000 81,220 Bus Acquired 2 3 $7,200 11,600 8,200 Straight-line Declining-balance 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 121,700. Actual miles of use in the first 3 years were: 2014, 25,000; 2015, 31,400; and 2016, 29,600 (a1) Your answer is correct. Calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places,e.g.0.50.) Depreciation expense 0.6 per mile SHOW SOLUTIONSHOW ANSWER LINK TO TEXT

Explanation / Answer

Depreciation exp for Bus no 1 (SLM) Per annum Exp under SLM = (97700-7200)/5 18100 SLM rate = 18100/(97700-7200)= 20% Accumlated dep feom 1 jan 2013 to 31 dec 2015 18100*3= 54300 Depreciation exp for Bus no 2 (Double Declining) Double declining rate = SLM rate * 2                                              = 20% * 2 = 40% Opening bal dep rate dep exp closing bal 2013 (123000-11600)=111400 40% 44560 66840 2014 66840 40% 26736 40104 2015 40104 40% 16041.6 24062.4 Total 87337.6 Depreciation exp for Bus no 3 (Units of activity) Actual miles used dep exp per mile Total dep exp 2014 25000 0.6 15000 2015 31400 0.6 18840 Total 33840

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