Compute the depreciation cost per unit Westride Transport Co. uses the units-of-activity method in depreciating itsfleet. One bus was purchased on January1, 2020, at a cost of $145,000. Over its 5-year useful life, the bus is expected to bedriven 250,000 miles. The salvage valueis expected to be $10,000.Compute the depreciation cost per unit(per mile).

Explanation of Units-of-Activity Method: The units-of-activity method is a depreciation approach…

Answered: Westride Transport Co. uses the units-…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4EB: Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is...

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Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.
Urquhart Global purchases a building to house its administrative offices for $500,000. The best estimate of the salvage value at the time of purchase was $45,000, and it is expected to be used for forty years. Urquhart uses the straight-line depreciation method for all buildings. After ten years of recording depreciation, Urquhart determines that the building will be useful for a total of fifty years instead of forty. Calculate annual depreciation expense for the first ten years. Determine the depreciation expense for the final forty years of the assets life, and create the journal entry for year eleven.
Grandorf Company replaced the engine in a truck for 8,000 and expects the new engine will extend the life of the truck two years beyond the original estimated life. Related information is provided below. Cost of truck 65,000 Salvage value 5,000 Original estimated life 6 years The truck was purchased on January 1, 20-1. The engine was replaced on January 1, 20-6. Using straight-line depreciation, compute depreciation expense for 20-6.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for ten years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.
Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?
Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. With DEPREC5 still on the screen, click the Chart sheet tab. This chart shows the accumulated depreciation under all three depreciation methods. Identify below the depreciation method that each represents. Series 1 _____________________ Series 2 _____________________ Series 3 _____________________ When the assignment is complete, close the file without saving it again. Worksheet. The problem thus far has assumed that assets are depreciated a full year in the year acquired. Normally, depreciation begins in the month acquired. For example, an asset acquired at the beginning of April is depreciated for only nine months in the year of acquisition. Modify the DEPREC2 worksheet to include the month of acquisition as an additional item of input. To demonstrate proper handling of this factor on the depreciation schedule, modify the formulas for the first two years. Some of the formulas may not actually need to be revised. Do not modify the formulas for Years 3 through 8 and ignore the numbers shown in those years. Some will be incorrect as will be some of the totals. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the completed file as DEPRECT. Hint: Insert the month in row 6 of the Data Section specifying the month by a number (e.g., April is the fourth month of the year). Redo the formulas for Years 1 and 2. For the units of production method, assume no change in the estimated hours for both years. Chart. Using the DEPREC5 file, prepare a line chart or XY chart that plots annual depreciation expense under all three depreciation methods. No Chart Data Table is needed; use the range B29 to E36 on the worksheet as a basis for preparing the chart if you prepare an XY chart. Use C29 to E36 if you prepare a line chart. Enter your name somewhere on the chart. Save the file again as DEPREC5. Print the chart.
Metlock, Inc. purchased a delivery truck for $30,000 on January 1, 2022. The truck has an expected salvage value of $3,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,400 in 2022 and 12,500 in 2023. Calculate depreciable cost per mile under units-of-activity method.
Cheyenne Corp. purchased a delivery truck for $42,000 on January 1, 2022. The truck has an expected salvage value of $9,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,600 in 2022 and 10,000 in 2023. Calculate depreciable cost per mile under units-of-activity method.
Splish Brothers Inc. purchased a delivery truck for $47,000 on January 1, 2022. The truck has an expected salvage value of $12,000, and is expected to be driven 100,000 miles over its estimated useful life of 10 years. Actual miles driven were 15,500 in 2022 and 14,700 in 2023. Calculate depreciable cost per mile under units-of-activity method.
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
On January 1, 2021, XYZ Motors purchased a truck for $42,000. The truck was estimated to have a 6-year useful life with 120,000 miles of total usage. The salvage value was estimated to be $6,000. Using the units-of-production method, what is the depreciation expense per mile?

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