Question: AJ Bus Ltd uses the units-of-production method in depreciating its buses. One bus was purchased on 1 January 2015 at a cost of $268 000.

AJ Bus Ltd uses the units-of-production method in depreciating its buses. One bus was purchased on 1 January 2015 at a cost of $268 000. Over its 5-year useful life, the bus is expected to be driven 120 000 kilometres. Residual value is expected to be $10 000.

Required

(a) Calculate the depreciation cost per unit.

(b) Prepare a depreciation schedule assuming actual distance travelled was: 2015, 29 000 km; 2016, 28 000 km; 2017, 30 000 km; 2018, 20 000 km; and 2019, 13 000 km.

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