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In recent years, Sarasota Transportation purchased three used buses

Accounting Oct 24, 2020

In recent years, Sarasota 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

1 1/1/18 $ 99,300 $ 7,500 4 Straight-line

2 1/1/18 126,000 11,500 4 Declining-balance

3 1/1/19 91,100 8,500 4 Units-of-activity

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 unit

Expert Solution

Computation of Depreciation Expense per mile under Units-of-Activity Method:

Depreciable Amount = Cost of Bus - Salvage Value

= $91,100-$8,500

Depreciable Amount = $82,600

 

Depreciation Expense per mile = Depreciable Amount / Total Expected Miles

= $82,600/118,000

Depreciation Expense per mile = $0.70 per mile

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