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  • Excercise P10 2B

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    Karen Hernandez
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    The document contains information about three buses being considered for purchase, including their costs, expected salvage values, estimated useful lives, and depreciation calculations. Bus 1 would use the straight-line depreciation method at a rate of $0.80 per unit of the 120,000 estimated useful life miles. Bus 2 would use the declining-balance method at a 40% rate, resulting in $56,000 of annual depreciation. Bus 3 uses a units-of-activity method, depreciating $7.67 per the estimated 34,000 units of activity during the year, equaling annual depreciation of $260,780.

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    Acco 112

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    The document contains information about three buses being considered for purchase, including their costs, expected salvage values, estimated useful lives, and depreciation calculations. Bus 1 would use the straight-line depreciation method at a rate of $0.80 per unit of the 120,000 estimated useful life miles. Bus 2 would use the declining-balance method at a 40% rate, resulting in $56,000 of annual depreciation. Bus 3 uses a units-of-activity method, depreciating $7.67 per the estimated 34,000 units of activity during the year, equaling annual depreciation of $260,780.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
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    4 views3 pages

    Excercise P10 2B

    Uploaded by

    Karen Hernandez
    The document contains information about three buses being considered for purchase, including their costs, expected salvage values, estimated useful lives, and depreciation calculations. Bus 1 would use the straight-line depreciation method at a rate of $0.80 per unit of the 120,000 estimated useful life miles. Bus 2 would use the declining-balance method at a 40% rate, resulting in $56,000 of annual depreciation. Bus 3 uses a units-of-activity method, depreciating $7.67 per the estimated 34,000 units of activity during the year, equaling annual depreciation of $260,780.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
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    of 3

    DATA: Bus 1

    DATA: Bus 2

    DATA: Bus 3

    Cost

    $98,000.00

    Cost

    $140,000.00

    Cost

    $92,000.00

    Expected
    Salvage
    Value

    $6,000.00

    Expected
    Salvage Value

    $10,000.00

    Expected Salvage
    Value

    $8,000.00

    Estimated
    useful life in
    years

    Estimated useful
    life in years
    4

    Estimated useful
    life in years

    Estimated
    useful life in
    miles

    120,000

    Estimated useful
    life in miles
    120,000

    Estimated useful
    life in miles

    120,000

    (A)
    Straight Line (Bus 1)
    Depreciable
    Cost

    96,000.00

    Depreciable
    Cost per
    Unit
    $0.80

    Total Units of
    Activity

    Depreciable Cost
    per Unit

    120,000

    $0.80

    Units of Activity
    During the Year

    Annual
    Depreciation
    Expense

    34,000

    $27,200

    Declining-balance (Bus 2)
    Book Value at
    Beginning of
    Year

    Declining
    Balance Rate

    $140,000.00

    40%

    Annual
    Depreciation
    Expense
    $56,000.00

    Units-of-activity (Bus 3)
    Depreciable
    Cost
    $92,000.00
    Depreciable
    Cost per
    Unit
    $7.67

    Total Units of
    Activity
    12,000

    Units of Activity
    During the Year
    34,000

    =
    =

    Depreciable Cost
    per Unit
    $7.67
    Annual
    Depreciation
    Expense
    $260,780

    (B)

    Year

    Book Value
    Beginning
    of Year

    2003

    $140,000.00

    Depreciation
    Rate
    40%

    Time
    9/12

    Annual
    Depreciation
    $42,000.00

    2004

    $98,000.00

    40%

    $39,200.00

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