Question

Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2017, at a cost of $215,150. Over its 4-year useful life, the bus is expected to be driven 142,500 miles. Salvage value is expected to be $7,100.

Compute the depreciable cost per unit. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation cost per unit $ per mile LINK TO TEXT

Prepare a depreciation schedule assuming actual mileage was: 2017, 38,500; 2018, 31,000; 2019, 31,000; and 2020, 42,000. (Round cost per unit to 2 decimal places, e.g. 15.25 and all other answers to 0 decimal places, e.g. 5,275.) Computation End of Year Year Units of Activity × Depreciation Cost /Unit = Annual Depreciation Expense Accumulated Depreciation Book Value 2017 $ $ $ $ 2018 2019 2020

Answer 1

Depreciation cost per unit = ( Cost - Salvage value ) / Expected miles to be driven = ( 215150 - 7100 ) / 142500

1.46

per mile

Computation						End of year
Year	Units of activity	x	Depreciation cost / unit	=	Annual depreciation expense	Accumulated depreciation	Book value
2017	38500	x	1.46	=	56210	56210	158940
2018	31000	x	1.46	=	45260	101470	113680
2019	31000	x	1.46	=	45260	146730	68420
2020	42000	x	1.46	=	61320	208050	7100