Wildhorse Arrow Ltd. purchased a new bus on October 1, 2024, at a total cost of $200,720. Management is considering the merits of using the diminishing balance or unit-of-production methods of depreciation instead of the straight-line method, which is currently uses for its other buses. The new bus has an estimated residual value of $20,000, and an estimated useful life of either four years or 301,200 km. Use of the bus will be sporadic so it could be much higher in some years than in others. Assume the new bus is driven as folows: 7,800 km in 2024; 100,000 km in 2025; 63,400 km in 2026; 94,600 km in 2027; and 35,400 kmin 2028, Wildhorse Arrow has an October 31 year end. Prepare separate depreciation schedules for the life of the bus using: (Round depreciation per unit to 2 decimal places, c. 5.28 and final answers to O decimal places, eg. 5,275) (1) Straight-line method: Depreciable Year Amount Depreciation Expense Accumulated Depreciation Carrying Amount 2024 $ 2025 2026 2027 2026 (2) Double-diminishing-balance method: Opening Carrying Year Amount Depreciation Expense Accumulated Depreciation Carrying Amount 2024 $ $ 2025 2026 2027 2026 (3) Units-of-production method: Year Units-of-Production 2024 2025 2026 2027 2020 Depreciation Expense Accumulated Depreciation Carrying Amount
Wildhorse Arrow Ltd. purchased a new bus on October 1, 2024, at a total cost of $200,720. Management is considering the merits of using the diminishing balance or unit-of-production methods of depreciation instead of the straight-line method, which is currently uses for its other buses. The new bus has an estimated residual value of $20,000, and an estimated useful life of either four years or 301,200 km. Use of the bus will be sporadic so it could be much higher in some years than in others. Assume the new bus is driven as folows: 7,800 km in 2024; 100,000 km in 2025; 63,400 km in 2026; 94,600 km in 2027; and 35,400 kmin 2028, Wildhorse Arrow has an October 31 year end. Prepare separate depreciation schedules for the life of the bus using: (Round depreciation per unit to 2 decimal places, c. 5.28 and final answers to O decimal places, eg. 5,275) (1) Straight-line method: Depreciable Year Amount Depreciation Expense Accumulated Depreciation Carrying Amount 2024 $ 2025 2026 2027 2026 (2) Double-diminishing-balance method: Opening Carrying Year Amount Depreciation Expense Accumulated Depreciation Carrying Amount 2024 $ $ 2025 2026 2027 2026 (3) Units-of-production method: Year Units-of-Production 2024 2025 2026 2027 2020 Depreciation Expense Accumulated Depreciation Carrying Amount
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Wildhorse Arrow Ltd. purchased a new bus on October 1, 2024, at a total cost of $200,720. Management is considering the merits of
using the diminishing-balance or unit-of-production methods of depreciation instead of the straight-line method, which it currently
uses for its other buses. The new bus has an estimated residual value of $20,000, and an estimated useful life of either four years or
301,200 km. Use of the bus will be sporadic so it could be much higher in some years thanin others. Assume the new bus is driven as
follows: 7,800 km in 2024; 100,000 km in 2025; 63,400 km in 2026; 94,600 km in 2027; and 35,400 km in 2028. Wildhorse Arrow has
an October 31 year end.
Prepare separate depreciation schedules for the life of the bus using: (Round depreciation per unit to 2 decimal places, eg. 5.28 and
final answers to decimal places, e.g. 5,275)
(1) Straight-line method:
Depreciable
Year
Amount
Depreciation
Expense
Accumulated
Carrying
Depreciation
Amount
2024 $
$
$
2025
2026
2027
2026
(2) Double-diminishing-balance method:
Opening
Carrying
Year
Amount
Depreciation
Expense
Accumulated
Depreciation
Carrying
Amount
2024 $
$
$
$
2025
2026
2027
2028
(3) Units-of-production method:
Depreciation
Accumulated
Year
Units-of-Production
Expense
Depreciation
Carrying
Amount
2024
$
$
2025
2026
2027
2026
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