Canada Canning Company owns processing equipment that had an initial cost of $106,000, expected useful life of
Question:
During the equipment's fifth year of service, the following expenditures were made:
Jan. 7 Lubricated and adjusted the equipment to maintain optimum performance, at a cost of $500.
Mar. 13 Replaced belts, hoses, and other parts that were showing signs of wear on the equipment, at a cost of $350.
June 28 Completed a $14,000 overhaul of the equipment. The work included the installation of new computer controls to replace the original controls, which had become technologically obsolete. As a result of this work, the estimated useful life of the equipment was increased to 10 years and the estimated residual value was increased to $11,000.
Required:
a. Prepare journal entries to record each of the above transactions.
b. Calculate the depreciation expense that should be recorded for this equipment in the fourth year of its life, in the fifth year of its life (the year in which the above transactions took place), and in the sixth year of its life.
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Related Book For
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
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