In recent years, Avery Transportation purchased three used buses. Because of fre
ID: 2566815 • Letter: I
Question
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 shown as follows. Bus Acquired Cost Salvage Value Useful Life in Years Depreciation Method 1 1/1/17 $96,000 $6,000 5 Straight-line 2 1/1/17 110,000 10,000 4 Declining-balance 3 1/1/18 92,000 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 120,000. Actual miles of use in the first 3 years were 2018, 24,000; 2019, 34,000; and 2020, 30,000. Instructions (a) Compute the amount of accumulated depreciation on each bus at December 31, 2019. Bus 2, 2018, $82,500 (b) If Bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2017 and (2) 2018?
P9-2ACompute depreciation under different methods LO 2) 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 shown as follows Bus Acquired Cost $ 96,000 110.000 92,000 Salvage Vle Useful Life in Years Depreciation Method S 6,000 10,000 8,000 1/1/17 Straight-line Declining-balance 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 120,000. Actual miles of use in the first 3 years were 2018, 24,000; 2019, 34,000; and 2020. 30,000 Instructions Compute the amount of accumulated depreciation on each bus at December 31, 2019 Bus 2, 2018, $82.500 (a) b) If Bus 2 was purchased on Ap instead of January 1, what is the depreciation expense for this bus in(1) 2017 and (2) 2018?Explanation / Answer
Bus Acquired on Cost Salvage Value Depreciable Value Useful Life Depreciable Method Total 1 01-01-2017 96000 6000 90000 5 Straight Line 2 01-01-2017 110000 10000 100000 4 Double Declining 3 01-01-2018 92000 8000 84000 5 Units of Activity 120000 2018 24000 2019 34000 2020 30000 For Bus 1: Acquired on Depreciable Value Useful Life Depreciable Method Total 88000 01-01-2017 90000 5 Straight Line Depreciation PA 18000 Accumalated Dep 2019 54000 For Bus 2: Acquired on Depreciable Value Useful Life Depreciable Method 01-01-2017 110000 4 Double Declining Rate of Depreciation(SL) 25% (1/4) Double Declining 50% Depreciation 2017 55000 Years Intial Value Depreciation Closing Balance 2017 110000 55000 55000 2018 55000 27500 27500 2019 27500 13750 13750 Total Depreciaion 96250 For Bus 3: Acquired on Depreciable Value Useful Life Depreciable Method 01-01-2018 84000 5 Units of Activity Depreciation PU of Activity 0.700 Year Activity Depreciation 2018 24000 16800 2019 34000 23800 Total Depreciaion 40600 B) If Bus 2 was purchased on April 1 Bus Acquired on Cost Salvage Value Useful Life Depreciable Method 2 01-04-2017 110000 10000 4 Double Declining Rate of Depreciation(SL) 25% (1/4) Double Declining 50% Depreciation 2017 55000 Years Intial Value Depreciation Closing Balance 2017 110000 41250 68750 2018 68750 34375 34375 2019 34375 17187.5 17187.5 Total Depreciaion 92812.5
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