Question

In recent years, Pina Colada 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 summarized as follows Salvage Value Useful Life in Years Depreciation Method Acquired Bus Cost 1/1/18 $97,000 8,000 Straight-line 1 5 Declining-balance 1/1/18 2 127,000 11,500 5 94,100 Units-of-activity 3 1/1/19 8,000 4 For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 123,000. Actual miles of use in the first 3 years were 2019, 27,500; 2020, 33,000; and 2021, 29,000. For Bus #3, calculate depreciation expense per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciation expense per mile LINK TΟ ΤΕXΤ Compute the amount of accumulated depreciation on each bus at December 31, 2020. (Round answers to 0 decimal places, e.g. 2,125.) Accumulated depreciation BUS 1 $ BUS 2 $ BUS 3 $ LINK TO ΤΕXT If Bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2018 and (2) 2019? (Round answers to 0 decimal places, e.g. 2,125.) (2) 2019 (1) 2018 Depreciation expense Open Show Work Click if you would like to Show Work for this question:

Answer 1

BUS -1 Cost of Asset 97000 Residual Value 8000 Useful Life 5 Depreciable Asset = Cost - Residual value Depreciable Asset 89000 Depreciation p.a = Depreciable asset / Useful Life Depreciation p.a = 17800 Straight line Method Depreciation Accumulated Depreciaton 17,800 $ 35,600 $ 53,400 $ 53,400 $ Book value Year expenses 17,800 $ 17,800 $ 17,800 $ 53,400 $ 79,200 2018 2019 61,400 $ 2020 43,600 Total 43,600

BUS-3 Cost of Asset 94100 Residual Value 8000 Total production/hours 123000 Depreciable Asset = Cost - Residual value Depreciable Asset Depreciation per mile Depreciable asset Total Miles Depreciation per mile = 86100 0.70 Units of Activity Depreciable Depreciation Depreciation Accumulated Per miles Depreciaton 19,250 $74,850 42,350 $ 62,650 $ 62,650 $ Miles Miles Year Book value expenses 19,250 $ 23,100 $ 20,300 $ 62,650 $ 27500 $ 0.70$ 0.70$ 0.70 $ 0.70 $ 2019 27500 33000 $ 33000 2020 51,750 29000 $ 2021 29000 31,450 89500 $ Total 31,450 89500

BUS-2 ( 1*200 /useful life ) Depreciation rate 40% Double Decline Method Accumulate d Depreciaton Book value Book value at Beginning of the Depreciation Depreciation Year rate year expenses 50,800 50,800$76,200 30,480$81,280$45,720 $ $ 2018 127,000 40.00% $ 40.00% 2019 76,200 18,288 99,568$27,432 $ 2020 45,720 40.00% 99,568 $99,568 $ Total 27,432

If Bus - 2 purchased at April 1st .

BUS -2 Depreciation rate (1*200 /useful life) 40% Double Decline Method Accumulate d Book value at Beginning of the Depreciation Depreciation Depreciaton Book value Year rate year expenses 38,100$38,100$ 88,900 35,560 $73,660$53,340 21,336 $94,996 $32,004 $ 2018 127,000 30.00% $ 2019 40.00% 88,900 2020 53,340 40.00% 94,996 94,996 $32,004 Total SS S