Expenditures After Acquisition McClain Company incurred the following expenditures during 2016: Apr. 9 The air conditioning...

 

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Expenditures After Acquisition McClain Company incurred the following expenditures during 2016: Apr. 9 The air conditioning system in the old manufacturing facility was replaced for $83,000. The old air conditioning system had a cost of $74,000 and a book value of $2,000. The old air conditioning system had no scrap value. June 29 Annual maintenance of $38,000 was performed. Sept. 12 The roof of the old manufacturing facility is replaced at a cost of $65,000. This expenditure substantially extended the life of the facility. Dec. 28 A new wing was added to the manufacturing facility at a cost of $275,000. This expenditure substantially increased the productive capacily of the plant. Required: 1. Prepare journal entries to record McClain's expenditures for 2016. 2. Next Level What is the effect on the financial statements if management had improperly accounted for the: a. addition of the new wing to the manufacturing facility b. annual maintenance expenditures Expenditures After Acquisition McClain Company incurred the following expenditures during 2016: Apr. 9 The air conditioning system in the old manufacturing facility was replaced for $83,000. The old air conditioning system had a cost of $74,000 and a book value of $2,000. The old air conditioning system had no scrap value. June 29 Annual maintenance of $38,000 was performed. Sept. 12 The roof of the old manufacturing facility is replaced at a cost of $65,000. This expenditure substantially extended the life of the facility. Dec. 28 A new wing was added to the manufacturing facility at a cost of $275,000. This expenditure substantially increased the productive capacily of the plant. Required: 1. Prepare journal entries to record McClain's expenditures for 2016. 2. Next Level What is the effect on the financial statements if management had improperly accounted for the: a. addition of the new wing to the manufacturing facility b. annual maintenance expenditures