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

Question

Exercise 9-5 Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2019, at a cost of $240,418. Over its 4-year useful life, the bus is expected to be driven 147,400 miles. Salvage value is expected to be $9,000 Compute the depreciable cost per unit. (Round answer to 2 decimal places, e.g, 0.50.) Depreciation cost per unit s per mile LINK TO TEXT VIDEO: APPLIED SKILLS Prepare a depreciation schedule assuming actual mileage was: 2019, 32,400; 2020, 39,000; 2021, 50,000; and 2022, 26,000. (Round cost per unit to 2 decimal places, e.g. 15.25 and all other answers to 0 decimal places, e.g. 5,275.) Computation End of Year Annual Units of Depreciation Depreciation Accumulated Depreciation Book Value Year Activity × Cost /Unit - Expense 2019 2020 2021 2022

Explanation / Answer

Calculate depreciation cost per unit :

Depreciation cost per mile = (Original cost-salvage value)/expected mile

= (240418-9000)/147400

Depreciation cost per mile = 1.57 per mile

b) Depreciation schedule :

Computation End of year Year Units of activity * Depreciation cost/unit = Annual depreciation expense Accumlated depreciation Book value 2019 32400 * 1.57 = 50868 50868 189550 2020 39000 * 1.57 = 61230 112098 128320 2021 50000 * 1.57 = 78500 190598 49820 2022 26000 * 1.57 = 40820 231418 9000

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