In recent years, Marigold Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each bus, and various methods have been used. Information concerning the buses is summarized in the table below. Bus 1 2 3 Acquired Jan 1, 2020 Jan 1, 2020 (a1) Jan, 1, 2021 Cost $99,200 111,000 92,500 Salvage Value $6,000 11,500 8,500 Useful Life in Years 4 4 4 Depreciation Method: Straight-line Declining-balance Units-of-activity For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 120,000. Actual miles of use in the first 3 years were 2021, 26,000; 2022, 34,500; and 2023, 30,000.
In recent years, Marigold Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each bus, and various methods have been used. Information concerning the buses is summarized in the table below. Bus 1 2 3 Acquired Jan 1, 2020 Jan 1, 2020 (a1) Jan, 1, 2021 Cost $99,200 111,000 92,500 Salvage Value $6,000 11,500 8,500 Useful Life in Years 4 4 4 Depreciation Method: Straight-line Declining-balance Units-of-activity For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 120,000. Actual miles of use in the first 3 years were 2021, 26,000; 2022, 34,500; and 2023, 30,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:In recent years, Marigold Transportation purchased three used buses. Because of frequent turnover in the accounting department, a
different accountant was in charge of selecting the depreciation method for each bus, and various methods have been used.
Information concerning the buses is summarized in the table below.
Bus
1
2
3
Acquired
Jan 1, 2020
Jan 1, 2020
(a1)
Jan, 1, 20211
Cost
$ 99,200
111,000
92,500
Salvage
Value
$ 6,000
11,500
8,500
Useful Life
in Years
4
4
4
Depreciation
Method:
Straight-line
Declining-balance
Units-of-activity
For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are
expected to be 120,000. Actual miles of use in the first 3 years were 2021, 26,000: 2022, 34,500; and 2023, 30,000.
Transcribed Image Text:(a1)
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 $
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