In recent years, Sarasota 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 Jan. 1, 2021 (a1) Cost $ 99,300 126,000 91,100 Salvage Value $7,500 11,500 8,500 Depreciation expense $ Useful Life in Years 4 4 4 For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 118,000. Actual miles of use in the first 3 years were 2021, 27,000; 2022, 34,500; and 2023, 32,500. Depreciation Method Straight-line Declining-balance 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.) per mile
In recent years, Sarasota 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 Jan. 1, 2021 (a1) Cost $ 99,300 126,000 91,100 Salvage Value $7,500 11,500 8,500 Depreciation expense $ Useful Life in Years 4 4 4 For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are expected to be 118,000. Actual miles of use in the first 3 years were 2021, 27,000; 2022, 34,500; and 2023, 32,500. Depreciation Method Straight-line Declining-balance 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.) per mile
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, Sarasota 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
(a1)
Jan. 1, 2020
Jan. 1, 2021
Cost
$ 99,300
126,000
Depreciation expense
91.100
Salvage
Value
$7,500
11,500
$
8.500
Useful Life
in Years
4
4
4
For the declining-balance method, the company uses the double-declining rate. For the units-of-activity method, total miles are
expected to be 118,000. Actual miles of use in the first 3 years were 2021, 27,000; 2022, 34,500; and 2023, 32,500.
Depreciation
Method
Straight-line
Declining-balance
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.)
per mile
Transcribed Image Text:Compute the amount of accumulated depreciation on each bus at December 31, 2022.
BUS 1
BUS 2
Accumulated depreciation
(b)
$
$
BUS 3 $
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Depreciation expense
If Bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2020 and (2) 2021?
(Round answers to O decimal places, e.g. 5,275.)
$
(1)
2020
$
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(2)
2021
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