Question

In recent years, Concord 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 1/1/18 $ 96,600 $ 7,000 4 Straight-line 2 1/1/18 123,000 12,000 5 Declining-balance 3 1/1/19 78,100 8,500 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 116,000. Actual miles of use in the first 3 years were 2019, 26,000; 2020, 36,000; and 2021, 30,500.

Answer 1

For the first bus annual depreciation will be = (96600 - 7000)/4 = $22,400 per year

Year	Beginning book value	Depreciation	Ending book value
2018	96,600	22,400	74,200
2019	74,200	22,400	51,800
2020	51,800	22,400	29,400
2021	29,400	22,400	7,000

2nd bus: Here rate as per straight line method = 100%/5 years = 20% per year. So double declining rate =20%*2 = 40% per year

Year	Beginning book value	Depreciation rate	Depreciation	Ending book value
2018	123,000.00	40%	49,200.00	73,800.00
2019	73,800.00	40%	29,520.00	44,280.00
2020	44,280.00	40%	17,712.00	26,568.00
2021	26,568.00	40%	10,627.20	15,940.80
2022	15,940.80		3,940.80	12,000.00

3rd bus: Total miles = 116,000. Thus depreciation per mile = (78100-8500)/116000 = $0.60 per mile

	A	B	C	D = B*C
Year	Beginning book value	Mile	Depreciation per mile	Total depreciation	Ending book value
2019	78,100.00	26,000.00	0.60	15,600.00	62,500.00
2020	62,500.00	36,000.00	0.60	21,600.00	40,900.00
2021	40,900.00	30,500.00	0.60	18,300.00	22,600.00