Chapter 9, Problem 9.3APE

(a)

To determine

Unit-of-activity Method: Under this method of depreciation, the depreciation expense is calculated on the basis of units produced in a year. This method is suitable when a company has fluctuating productive rate. The formula to calculate the depreciation expense under this method is as follows:

$\text{Depreciation per unit = }\frac{\text{Cost}-\text{Residual value}}{\text{Estimated units of useful life}}$

$\text{Depreciation Expense = Depreciation per unit }\times \text{ Usage}$

the depreciable cost of the tractor.

(b)

To determine

the depreciation rate.

(c)

To determine

the units-of-activity depreciation for the year.