Question

Problem 9-2A (Part Level Submission) In recent years, Novak 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 1/1/17 $ 98,300 $ 7,000 5 Straight-line 2 1/1/17 118,000 10,000 4 Declining-balance 3 1/1/18 88,640 8,000 4 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 126,000. Actual miles of use in the first 3 years were 2018, 24,000; 2019, 31,500; and 2020, 30,000.

Problem 9-2A (Part Level Submission) In recent years, Novak 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. Useful Life in Years Bus Acquired 1/1/17 1/1/17 1/1/18 Cost $ 98,300 118,000 88,640 Salvage Value $7,000 10,000 8,000 Depreciation Method Straight-line Declining-balance 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 126,000. Actual miles of use in the first 3 years were 2018, 24,000; 2019, 31,500; and 2020, 30,000. (a1) For Bus #3, calculate depreciable cost per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciable costs per mile Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT VIDEO: SIMILAR PROBLEM Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER (a2) The parts of this question must be completed in order. This part will be available when you complete the part above. (b) The parts of this question must be completed in order. This part will be available when you complete the part above.

Answer 1

1) Depreciation cost per mile = Depreciable base/Estimated miles = (88640-8000)/126000 = 0.64 per mile