*Exercise 9-5 Yello Bus Lines uses the units-of-activity method in depreciating

Question

*Exercise 9-5 Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2017, at a cost of $263,569. Over its 4-year useful life, the bus is expected to be driven 156,300 miles. Salvage value is expected to be $8,800 Compute the depreciable cost per unit. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation cost per unit Prepare a depreciation schedule assuming actual mileage was: 2017, 27,300; 2018, 61,000; 2019, 43,000; and 2020, 25,000. (Round cost per unit to 2 decimal places, e.g. 15.25 and all other answers to 0 decimal places, e.g. 5,275.) per mile Computation End of Year Units of Activi Depreciation Cost /Unit Annual Depreciation Expense Accumulated Depreciation Book Value Year 2017 2018 2019 2020 Question Attempts: 0 of 3 used

Explanation / Answer

Depreciation cost per unit=(263569-8800)/156300= $1.63 per mile Year Units of activity Depreciation cost/unit Annual depreciation expense Accumulated depreciation Book value 2017 27300 1.63 44499 44499 219070 2018 61000 1.63 99430 143929 119640 2019 43000 1.63 70090 214019 49550 2020 25000 1.63 40750 254769 8800

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