ooo Inland C.. LTE 7:57 AM 54% edu gen wileyplus.com Problem 10-2A (Part Level S

Question

ooo Inland C.. LTE 7:57 AM 54% edu gen wileyplus.com Problem 10-2A (Part Level Submission) 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. Salvage Useful Life Bus Acquired $ 98,200 124,000 1,500 8,000 7,500 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 2016, 26,000 2017, 31,500; and 2018, 29,500 (al) Your answer is correct. 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 Attempts:1 of 3 used (a2) Compute the amount of accumulated depreciation on each bus at December 31, 2017. (Round answers to O decimal places, e.g 2,125.) BUS BUS 2 BUS 3 The parts of this question must be completed in order. This part will be

Explanation / Answer

Depreciation = 28,125X 59%2. (a1)

Value of asset = $91,500

salvage value = $7,500

Expected miles = 120,000

Depreciation per mile = (91,500-7,500)/120,000= $ 0.70 per mile

(a2)

Opening value = (112,500-56250) = 56,250

Depreciation = 56,250 X 50%

Opening value = 56,250-28,125 = 28,125

Depreciation = 28,125X 50%

Notes:

1. In straight line method, annual depreciation is same and is computed by dividing the depreciable value by useful life.

2. Under double declining method, depreciation is charged at double the rate on opening book value of asset.

Here depreciation rate = (depreciable amount/ life) / depreciable amount = 25%

Double declining rate = 50%

Particulars Bus 1 Bus 2 Bus 3 Depreciable value (cost- salvage value) 90,200 112,500 84,000 Depreciation method Straight line Double declining Units of activity Useful life in years 4 4 5 Depreciation 2015 (90,200/4) (112,500 X 50%) Nil as asset was purchased in 2016 = 22,550 56,250 depreciation 2016
(90,200/4)

Opening value = (112,500-56250) = 56,250

Depreciation = 56,250 X 50%

(26,000 miles X 0.70 per mile) = 22,550 28,125 18,200 depreciation 2017 (90,200/4)

Opening value = 56,250-28,125 = 28,125

Depreciation = 28,125X 50%

(31,500 miles X 0.70 per mile) = 22,550 14,063 22,050 Total depreciation till 2017 67,650 98,438 40,250

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