Question

Swifty Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2020, at a cost of $263,321. Over its 6-year useful life, the bus is expected to be driven 174,300 miles. Salvage value is expected to be $7,100.

Prepare a depreciation schedule assuming actual mileage was: 2020, 46,300; 2021, 45,000; 2022, 48,000; and 2023, 35,000. (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	x	Depreciation Cost /Unit	=	Annual Depreciation Expense		Accumulated Depreciation		Book Value
2020				$		$		$		$
2021
2022
2023

Answer 1

Solution

Straight line Depreciation
	Computation			End of year
Years	Units of activity   x	Depreciation cost/ Unit	Annual Depreciation Expense	Accumulated depreciation	Book value
2020	$          46,300.00	$                        1.47	$             68,061.00	$              68,061.00	$       195,260.00
2021	$          45,000.00	$                        1.47	$             66,150.00	$            134,211.00	$       129,110.00
2022	$          48,000.00	$                        1.47	$             70,560.00	$            204,771.00	$         58,550.00
2023	$          35,000.00	$                        1.47	$             51,450.00	$            256,221.00	$            7,100.00
			$           256,221.00

Working

Units of Production method
A	Cost	$ 263,321
B	Residual Value	$ 7,100
C=A - B	Depreciable base	$ 256,221
D	Usage in units(in units)	174300
E	Depreciation per unit	$                         1.47