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Concord Transportation purchased three used buses

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Concord Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected th method for each bus, and various methods were selected. Information concerning the buses is shown as follows. Salvage Value Useful Life in Years Depreciation Method Bus Cost 1 4 Acquired 1/1/17 1/1/17 1/1/18 2 $ 96,600 123,000 78,100 $ 7,000 12,000 8,500 5 Straight-line Declining-balance Units-of-activity 3 5 For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 116,000. Actual mile first 3 years were 2018, 26,000; 2019, 36,000; and 2020, 30,500.
CALCULATOR F! (a1) Your answer is correct. For Bus #3, calculate depreciable cost per mile under units-of-activity method. (Round answer to 2 decimal places, e.g. 0.50.) Depreciable cost 0.6 per mile SHOW SOLUTION LINK TO TEXT VIDEO: SIMILAR PROBLEM Atte (a2) Compute the amount of accumulated depreciation on each bus at December 31, 2019. (Round depreciable cost per unit to 2 to 0 decimal places, e.g. 15%. Round final answers to 0 decimal places, e.g. 2,125.) Accumulated depreciation BUS 1 $ BUS 2 BUS 3 cy | © 2000-2020 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc.

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BUS-1 Straight line method:

Cost of bus = $96,600

Salvage value = $7,000

Useful life = 4 years

Date of acquisition = 01/01/2017

Depreciation for each year = $(\frac{cost-salvage}{life})$

= $(\frac{96600-7000}{4})$

= $22,400

Accumulated Depreciation for 3 years from 01/01/2017 to 31/12/2019 for BUS -1 = $22,400 * 3 = $67,200

BUS-2 Double declining balance method:

Cost of bus = $123,000

Salvage value = $12,000

Useful life = 5 years

Date of acquisition = 01/01/2017

Depreciation for each year under straight line method = $(\frac{cost-salvage}{life})$

= $(\frac{123000-12000}{5})$

= $22,200

Straightline Depreciation percentage = $(\frac{22200}{111000})*100$

= 20%

Depreciation percentage under doubledeclining balance method = 2 X straight line method depreciation percentage

= 2 * 20% = 40%

Depreciation for 2017 = 123000 * 40% = $49,200

Depreciation for 2018 = (123000-49200) * 40% = $29,520

Depreciation for 2019 = (123000-49200-29520) * 40% = $17,712

Total balance in accumulated depreciation for BUS-2 = $49,200 + $29,520 + $17,712 = $96,432

BUS-3 Units of activity method:

Cost of bus = $78,100

Salvage value = $8,500

Expected total miles = 116000

Date of acquisition = 01/01/2018

Actual miles for 2018 =26000

Actual miles for 2019 = 36000

Depreciation for the year 2018 = $\frac{Cost-salvage}{Expected total miles}*actual miles for 2018$

= $\frac{78100-8500}{116000}*26000$

= $15,600

Depreciation for the year 2019 = $\frac{Cost-salvage}{Expected total miles}*actual miles for 2019$

= $\frac{78100-8500}{116000}*36000$

= $21,600

Total accumulated depreciation from 01/01/2018 to 31/12/2019 for BUS-3 = $15,600 + $21,600 = $37,200

Therefore,

Accumulated Depreciation for 3 years from 01/01/2017 to 31/12/2019 for BUS -1 = $22,400 * 3 = $67,200

Accumulated depreciation for 3 years from 01/01/2017 to 31/12/2019 for BUS-2 = $49,200 + $29,520 + $17,712 = $96,432

Accumulated depreciation for 2 years from 01/01/2018 to 31/12/2019 for BUS-3 = $15,600 + $21,600 = $37,200

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Concord Transportation purchased three used buses

Accounting