Problem 9-2A Bus Acquired Cost Salvage Value Useful Life in Years Depreciation M

Question

Problem 9-2A

Bus

Acquired

Cost

Salvage
Value

Useful Life
in Years

Depreciation
Method

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Accumulated depreciation

BUS 1

BUS 2

BUS 3

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(1)
2015

(2)
2016

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Problem 9-2A

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 1/1/15 $ 96,900 $ 6,000 4 Straight-line 2 1/1/15 122,000 12,000 4 Declining-balance 3 1/1/16 82,400 8,000 5 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 124,000. Actual miles of use in the first 3 years were 2016, 23,000; 2017, 32,500; and 2018, 33,000. For Bus #3, calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.)
Depreciation expense $

per mile

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Compute the amount of accumulated depreciation on each bus at December 31, 2017. (Round depreciation cost per unit to 2 decimal places, e.g. 0.50 and depreciation rate to 0 decimal places, e.g. 15%. Round final answers to 0 decimal places, e.g. 2,125.)

Accumulated depreciation

BUS 1

$

BUS 2

$

BUS 3

$

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If Bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2015 and (2) 2016? (Round answers to 0 decimal places, e.g. 2,125.)

(1)
2015

(2)
2016

Depreciation expense $

$

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Question Attempts: Unlimited

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Explanation / Answer

1) Depreciation expense per mile (82400-8000)/124000 0.6 per mile 2) BUS 1 (96900-6000)/4 22725 Accumulated depreciation 22725*3= 68175 BUS 2 Rate = 1/4*2= 0.5 or 50% Accumul book year Dep dep value 1 122,000 61000 61000 61,000 2 61,000 30500 91500 30,500 3 30,500 15250 106750 15,250 BUS 3 year units rate Dep 1 23,000 0.6 13800 2 32,500 0.6 19500 33300 Accumulated Depreciation BUS 1 68175 BUS 2 106750 BUS 3 33300 3) year Dep dep value 2015 122,000 45750 45750 76,250 2016 76,250 38125 83875 38,125 dep for 2015 will be 122000*50%*9/12 2015 2016 Depreciation expense 45,750 38,125

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