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MATH P10-2A

# MATH P10-2A - Bus 3 \$ If bus no 2 was purchased on April 1...

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P10-2A In recent years, Juresic Transportation purchased three used buses. Because of frequent turnover in the accounting department, a different accountant selected the depreciation method for each bus, and various methods were selected. Bus Acquired Cost Salvage Value Useful Life in Years Depreciation Method 1 1/1/06 \$96,000 \$6,000 5 Straight-line 2 1/1/06 120,000 10,000 4 Declining-balance 3 1/1/07 80,000 8,000 5 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: 2007, 24,000; 2008, 34,000; and 2009, 30,000. Compute the amount of accumulated depreciation on each bus at December 31, 2008. Bus 1 \$ Bus 2 \$
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Unformatted text preview: Bus 3 \$ If bus no. 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2006 and (2) 2007? 2006 \$ 2007 \$ (a) Year Computation Cumulative 12/31 BUS 1 2006 2007 2008 \$ 90,000 X 20% = \$18,000 \$ 90,000 X 20% = \$18,000 \$ 90,000 X 20% = \$18,000 \$ 18,000 36,000 54,000 BUS 2 2006 2007 2008 \$120,000 X 50% = \$60,000 \$ 60,000 X 50% = \$30,000 \$ 30,000 X 50% = \$15,000 \$ 60,000 90,000 105,000 BUS 3 2007 2008 24,000 miles X \$.60* = \$14,400 34,000 miles X \$.60 * = \$20,400 \$ 14,400 34,800 *\$72,000 ÷ 120,000 miles = \$.60 per mile. (b) Year Computation Expense BUS 2 (1) (2) 2006 2007 \$120,000 X 50% X 9/12 = \$45,000 \$75,000 X 50% = \$37,500 \$45,000 \$37,500...
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