On October 1, 2012, Chignecto Manufacturing Company purchased a piece of high-tech equipment for $90,000 cash. Chignecto

Question:

On October 1, 2012, Chignecto Manufacturing Company purchased a piece of high-tech equipment for $90,000 cash. Chignecto estimated the equipment would have a six-year useful life and a residual value of $9,000. The company uses straight-line depreciation and has a September 30 fiscal year end.
On October 1, 2014, Chignecto paid $15,000 cash to upgrade the equipment. It is expected that the upgrade will significantly reduce the operating costs of the equipment. Chignecto also reviewed the equipment's expected useful life and estimated that due to changing technology, the equipment's total expected useful life will be four years and its residual value will be $5,000.
Instructions
(a) Calculate the annual depreciation expense for the first two years of the equipment's life.
(b) Calculate the carrying amount of the equipment at September 30, 2014.
(c) Record the expenditure to upgrade the equipment on October 1, 2014.
(d) Record the annual depreciation of the equipment on September 30, 2015.
(e) Show the presentation of the equipment on September 30, 2015.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...