Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January

Question:

Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2020, at a cost of $148,000. Over its 4-year useful life, the bus is expected to be driven 100,000 miles. Salvage value is expected to be $8,000.

Instructions
a. Compute the depreciable cost per unit.
b. Prepare a depreciation schedule assuming actual mileage was: 2020, 26,000; 2021, 32,000; 2022, 25,000; and 2023, 17,000.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...

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