On January 1, 2022, ABC Company purchased a new machine for $200,000. The machine has an estimated
Question:
On January 1, 2022, ABC Company purchased a new machine for $200,000. The machine has an estimated useful life of 10 years and no residual value. On December 31, 2024, the company spent $15,000 to overhaul the machine, which extended its useful life by an additional 5 years. The company uses straight-line depreciation for all of its machinery.
a) Calculate the annual depreciation expense for the machine before and after the overhaul.
b) Calculate the carrying value of the machine as of December 31, 2024, after the overhaul.
c) Journalize the entry to record the overhaul on December 31, 2024.
d) Journalize the entry to record the annual depreciation expense for the machine in 2025.
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson