In recent year, Avery Transportation purchased three used buses. Because of freq

Question

In recent year, 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. For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 120,000. Actual miles of use in 2016 were 24,000. Compute the amount of depreciation on each bus for 2016. Journalize the entry required for depreciation in 2016.

Explanation / Answer

SLM Cost of Bus                96,000.00 Salvage Value                  6,000.00 Life in years                          5.00 Particulars 2016 Depreciation(96,000-6,000)/5                18,000.00 Journal Entries Particulars Dr Amt Cr Amt Depreciation Expense Dr                18,000.00 To Bus             18,000.00 Life   4 Years Double decling balance method rate = 25%*2 50% Particulars 2015 2016 Opening Balance             110,000.00             55,000.00 Depreciation@50%                55,000.00             27,500.00 Closing balance                55,000.00             27,500.00 Journal Entries Particulars Dr Amt Cr Amt Depreciation Expense Dr                27,500.00 To Bus             27,500.00 Units of production Cost of Bus                92,000.00 Salvage Value                  8,000.00 Life in Units             120,000.00 Particulars 2016 Units of production in 2016                24,000.00 Depreciation(24,000/120,000)*(92,000-8,000)                16,800.00 Journal Entries Particulars Dr Amt Cr Amt Depreciation Expense Dr                16,800.00 To Bus             16,800.00

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