Exercise 9-19 Whippet Bus Lines uses the units-of-activity method in depreciatin

Question

Exercise 9-19 Whippet Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2017, at a cost of $140,000. Over its 4-year useful life, the bus is expected to be driven 240,000 miles. Salvage value is expected to be $9,200 Compute the depreciation cost per unit. (Round answer to 3 decimal places, e.g. 6.251) Depreciation cost per unit Prepare a depreciation schedule assuming actual mileage was: 2017, 56,000; 2018, 72,800; 2019, 57,400; and 2020, 37,800 (Round depreciation cost per unit to 3 decimal places, e.g. 0.125 and other answers to 0 decimal places, e.g. 125) Computation End of Year Units of Activity Depreciation Cost/Unit Annual Depreciation Expense Accumulated Depreciation Years Book Value 2017 2018 2019 2020

Explanation / Answer

Depreciation cost per unit = ( cost - salvage value)/expected miles 0.545 Depreciation Schedule years units of depreciation annual accumulated book activity cost/unit dep expe dep value 2017 56,000 0.545 30520 30520 109480 2018 72,800 0.545 39676 70196 69804 2019 57,400 0.545 31283 101479 38521 2020 37,800 0.545 20601 122080 17920

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