P10-2A

Compute depreciation under different methods.

(LO 2)

In recent years, Avery 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. Information concerning the buses is summarized as follows.

Bus	Acquired	Cost	Salvage Value	Useful Life in Years	Depreciation Method
1	1/1/15	$96,000	$6,000	5	Straight-line
2	1/1/15	110,000	10,000	4	Declining-balance
3	1/1/16	92,000	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 2016, 24,000; 2017, 34,000; and 2018, 30,000.

Instructions

(a)

Compute the amount of accumulated depreciation on each bus at December 31, 2017.

Bus 2, 2016, $82,500

(b)

If Bus 2 was purchased on April 1 instead of January 1, what is the depreciation expense for this bus in (1) 2015 and (2) 2016?