Reengineering Corporation operates a small repair facility for its products. At the beginning of 2009, the accounting

Question:

Reengineering Corporation operates a small repair facility for its products. At the beginning of 2009, the accounting records for the company showed the following balances for its only piece of equipment, purchased at the beginning of 2006:

Equipment ...................... $135,000

Accumulated depreciation ................45,000

During 2009, the following costs were incurred for repairs and maintenance on the equipment:

Routine maintenance and repairs ............ $ 815

Major overhaul of the equipment that improved efficiency .. 32,000

The company uses the straight-line method, and it now estimates the equipment will last for a total of 12 years with $500 estimated salvage value. The company’s fiscal year ends on December 31.

1. How much depreciation did Reengineering Corporation record on the equipment at the end of 2008?

2. After the overhaul at the beginning of 2009, what is the remaining estimated life of the equipment?

3. What is the amount of depreciation expense the company will record for 2009?

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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...