Question

NBTel Company had a truck that was purchased on July 7, 2012, for $36,000. The PPE Subledger shows
the following information regarding the truck:


A customized tool carrier was constructed and permanently fitted to the truck on July 3, 2014, at a cost of $9,600 cash. The tool carrier adds to the economic value of the truck. It will be used for the truck’s remaining life and have a zero residual value. The useful life and residual value of the truck did not change as a result of the addition of the tool carrier.

Required
1. Record the installation of the tool carrier assuming it is a component of the truck.
2. Calculate depreciation on the truck and its new component, the tool carrier, for the company’s December 31, 2014, and December 31, 2015, year-ends.
3. Calculate the book value of the truck at December 31, 2014 and2015.


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  • CreatedJanuary 08, 2015
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