Kauai Construction Company purchased a compressor for \(\$ 42,000\) 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 \(\$ 3,000\) related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model.

Required
Record the \(\$ 3,000\) 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.

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Assets = Equity Rev. - Exp. = Net Inc. Cash Flow Cash + 37,000 + Book Value of Compressor = Com. Stk. + Ret. Earn. 23,000 === 40,000 + 20,000 NA NA ==== NA NA