Blue Highway Bus Lines uses the units-of-activity method indepreciating its buse

Question

Blue Highway Bus Lines uses the units-of-activity method indepreciating its buses. One bus was purchased on January 1, 2007,at a cost of $120,000. Over its 4-year useful life, the bus isexpected to be driven 160,000 miles. Salvage value is expected tobe $8,000. (Round all answers to 2 decimalplaces.)

Compute the depreciation cost per unit. $ per mile

Prepare a depreciation schedule assuming actual mileage was:2007, 40,000; 2008, 52,000; 2009, 41,000; and 2010, 27,000.

2007
Annual depreciation $ Book Value $

2008
Annual depreciation $ Book Value $

2009
Annual depreciation $ Book Value $

2010
Annual depreciation $ Book Value $

Explanation / Answer

Depreciation cost per unit    120,000 -8,000       = 0.70 / mile         160,000 Yr         Cost             Miles            Depreciation       Bookvalue 2007 120,000   40,000    28,000          92,000 2008    52,000    36,400    55,600 2009    41,000    28,700    26,900 2010    27,000    18,900       8,000

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