In recent years Avery Transportation purchased three used bu

In recent years, Avery 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.

Bus

Acquired

Cost

Salvage
Value

Useful Life
in Years

Depreciation
Method

For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 125,000. Actual miles of use in the first 3 years were 2016, 25,500; 2017, 34,500; and 2018, 30,000.

Compute the amount of accumulated depreciation on each bus at December 31, 2017. (Round answers to 0 decimal places, e.g. 2,125.)

Accumulated depreciation

BUS 1

BUS 2

BUS 3

Bus		Acquired		Cost		Salvage Value		Useful Life in Years		Depreciation Method
1		1/1/15		$ 96,100		$ 7,000		4		Straight-line
2		1/1/15		119,000		11,000		5		Declining-balance
3		1/1/16		95,000		7,500		5		Units-of-activity

Solution

1) Depreciation expense per mile (95000-7500)/125000 0.7 per mile 2) BUS 1 (96100-7000)/4 22275 Accumulated depreciation 22275*3= 66825 BUS 2 Rate = 1/5*2= 0.4 or 40% Accumul book year Dep dep value 1 119,000 47600 47600 71,400 2 71,400 28560 76160 42,840 3 42,840 17136 93296 25,704 BUS 3 year units rate Dep 1 25,500 0.7 17850 2 34,500 0.7 24150 42000 Accumulated Depreciation BUS 1 66825 BUS 2 93296 BUS 3 42000 3) year Dep dep value 2015 119,000 35700 35700 83,300 2016 83,300 33320 69020 49,980 dep for 2015 will be 119000*40%*9/12 2015 2016 Depreciation expense 35,700 33,320