In recent years, Freeman Transportation purchased three used buses. Because of fre- Compute depreciation under quent turnover in the accounting department, a different accountant selected the depreciation different methods.

method for each bus, and various methods were selected. Information concerning the buses is i summarized below.

For the declining-balance method, the company uses the double-declining rate. For the unitsof-
activity method, total miles are expected to be 120,000. Actual miles of use in the first 3 years were: 2005, 24,000; 2006. 34,000; and 2007, 30,000.
Instructions

(a) Compute the amount of accumulated depreciation on each bus at December 31. 2006.

(b) If bus no. 2 was purchased on April 1 instead of January 1. what is the depreciation expense for this bus in (1) 2004 and (2) 2005?

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Salvage Bus Acquired Cost Value 1 1/1/04 $ 96,000 $ 6.000 2 1/1/04 140,000 3 1/1/05 92,000 10,000 8,000 Useful Life in Years Depreciation Method Straight-line Declining-balance Units-of-activity