Bus Acquired Cost Salvage Value Useful Life in Years Depreciation Method 2014 BU

Question

Bus

Acquired

Cost

Salvage
Value

Useful Life
in Years

Depreciation
Method

2014

BUS 1

BUS 2

BUS 3

2012

2013

Depreciation expense

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.

Bus

Acquired

Cost

Salvage
Value

Useful Life
in Years

Depreciation
Method

1 1/1/12 $ 98,000 $ 6,000 4 Straight-line 2 1/1/12 111,000 10,600 5 Declining-balance 3 1/1/13 83,280 8,400 4 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 124,800. Actual miles of use in the first 3 years were: 2013, 27,400; 2014, 32,400; and 2015, 29,500.

Explanation / Answer

For Bus #3, calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. $0.50.)

Compute the amount of accumulated depreciation on each bus at December 31, 2014. (Round answers to 0 decimal places,

If bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in 2012 and 2013? (Round answers to 0 decimal places, e.g. $2,125.)

124800 (83280-8400)/124800 0.60 Per miles

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