A company purchased certain equipment on January 2, 2017 at a cost of $20,000. The estimated useful
Question:
A company purchased certain equipment on January 2, 2017 at a cost of $20,000. The estimated useful life of the equipment was 8 years, with no salvage value expected to be realized. Depreciation is based on the straight-line method, with a full year's depreciation taken in the year of acquisition (2017). On January 2, 2023 (after the equipment had been in use for 6 years), the company overhauled the equipment at a cost of $4,000. This overhaul extended the life of the equipment by 2 years (from 8 years to 10 years).
The depreciation expense (after accounting for the overhaul) to be charged against income during the year ending December 31, 2023 will be:
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy