Tuscany Tours uses the units-of-activity method in depreciating

Tuscany Tours uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2008, at a cost of $115,000. Over its five-year useful life, the bus is expected to be driven 100,000 miles. Salvage value is expected to be $9,000.

(a) Compute the depreciation cost per unit.

(b) Prepare a depreciation schedule assuming actual mileage was: 2008, 24,000; 2009, 36,000; 2010, 20,000; and 2011, 20,000.


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...