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Concord Transportation purchased three used buses
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.
Expert Solution
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 = 
= 
= $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 =
= 
= $22,200
Straightline Depreciation percentage = 
= 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 = 
= 
= $15,600
Depreciation for the year 2019 = 
= 
= $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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