Problem IV: (9 points) Garner Bus Lines uses the units-of-activity method to depreciation its buses. On 1/1/X1, it purchased a bus at a cost of $90,000. Over its 5-year useful life, the bus is expected to be driven 200,000 miles. Its salvage value is expected to be $10,000.
Question: How much depreciation should be recorded in 20X1 if 50,000 miles are driven?
Problem V: (15 points) Clausen Corp. purchased a machine for $100,000 on 1/1/14. At that time, it estimated the machine would have a 5-year useful life and a $6,000 salvage value.
On 1/1/16, Clausen revised several estimates related to this machine. It determined the new total life of the machine to be 8 years and the revised salvage value to be $2,000.
A. What should be the "Accumulated Depreciation" account balance on 12/31/15? (Hint: This is before the estimate revisions are taken into account.)
B. On 1/1/16, taking into account the estimate revisions, what is the remaining depreciable cost of the machine?
C. What should be the amount of depreciation expense recorded for the year ending 12/31/16? Round to the nearest whole dollar.
D. Accounting Check √When taking into account the estimate revisions, the depreciable cost of this machine is $98,000 (the cost minus salvage value). In the chart below, enter the depreciation expense recognized each year over the eight years of this asset's total life. Does the total amount of depreciation taken equal this depreciable cost? If not, please go back and re-check your calculations. Note: The amount may be off by $1 or $2 due to rounding.