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 $105,000. Over its 4-year useful life, the bus is expected to be driven 190,000 miles. Salvage value is expected to be $8,100 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, 42,000; 2018, 54,600; 2019, 43,050; and 2020, 28,350. (Round depreciation cost per unit to 3 decimal places, e.g. 0.125 and other answers to O decimal places, e.g. 125) Computation End of Year Years 2017 2018 2019 2020 Units of Activity Depreciation Cost/Unit = Annual Depreciation Expense Accumulated Depreciation Book Value

Explanation / Answer

Cost of asset    $105,000 Useful life   190,000 miles Salvage value    $ 8,100 Depreciation cost per unit = Cost - Salvage value / estimated life = 105,000 -8100 / 190,000= $ 0.51 PER MILE End of Year Years Units of Activity * Dep cost per mile = Annual Dep Accumulated Dep Book Value 2017 42000 0.51 21420 21420 83580 2018 54600 0.51 27846 49266 55734 2019 43050 0.51 21955.5 71221.5 33778.5 2020 28350 0.51 14458.5 85680 19320

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