Monty Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2022, at a cost of$233,839. Over its 5-year useful life, the bus is expected to be driven 139,900 miles. Salvage value is expected to be $8,600.(a)Compute the depreciable cost per unit. (Round answer to 2 decimal places, eg 0.50.)Depreciation cost per unitper mileeTextbook and MediaSave for Later(b)Prepare a depreciation schedule assuming actual mileage was: 2022, 34,900: 2023, 28,000; 2024, 40,000; and 2025, 37,000.(Round cost per unit to 2 decimal places, eg 15.25 and all other answers to O decimal places, eg. 5,275.)ComputationAnnualDepreciationExpenseUnits ofDepreciationAccumulatedYearActivityCost /UnitDepreciation2022202320242025

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Description: Monty Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2022, at a cost of$233,839. Over its 5-year useful life, the bus is expected to be driven 139,900 miles. Salvage value is expected to be

Asset cost = 233,839 Salvage Value = 8,600 Total units = 139,900 Useful life = 5 years

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Accounting

Monty Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2022, at a cost of $233,839. Over its 5-year useful life, the bus is expected to be driven 139,900 miles. Salvage value is expected to be $8,600. (a)

Monty Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2022, at a cost of $233,839. Over its 5-year useful life, the bus is expected to be driven 139,900 miles. Salvage value is expected to be $8,600. (a)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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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Question

Monty Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2022, at a cost of
$233,839. Over its 5-year useful life, the bus is expected to be driven 139,900 miles. Salvage value is expected to be $8,600.
(a)
Compute the depreciable cost per unit. (Round answer to 2 decimal places, eg 0.50.)
Depreciation cost per unit
per mile
eTextbook and Media
Save for Later
(b)
Prepare a depreciation schedule assuming actual mileage was: 2022, 34,900: 2023, 28,000; 2024, 40,000; and 2025, 37,000.
(Round cost per unit to 2 decimal places, eg 15.25 and all other answers to O decimal places, eg. 5,275.)
Computation
Annual
Depreciation
Expense
Units of
Depreciation
Accumulated
Year
Activity
Cost /Unit
Depreciation
2022
2023
2024
2025

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