Sellers Construction Company purchased a compressor for $28,000 cash. It had an estimated useful life of four

Question:

Sellers Construction Company purchased a compressor for $28,000 cash. It had an estimated useful life of four years and a $4,000 salvage value. At the beginning of the third year of use, the company spent an additional $6,000 related to the equipment. The company€™s financial condition just prior to this expenditure is shown in the following statements model:

Required
Record the $6,000 expenditure in the statements model under each of the following independent assumptions:
a. The expenditure was for routine maintenance.
b. The expenditure extended the compressor€™s life.
c. The expenditure improved the compressor€™s operating capacity.

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...