Exerclse 8-14 Ordinary repalrs, extraordinary repalrs, and betterments LO C3Oki Company pays $250,550 for equipment expected to last four years and have a $30.000 salvage value. Prepare journal entries torecord the following costs related to the equipment.1. Paid $18.350 cash for a new component that increased the equipment's productivity.2. Paid $4,588 cash for minor repairs necessary to keep the equipment working well.3. Paid $11,300 cash for significant repairs to increase the useful life of the equipment from four to seven years.View transaction listJournal entry worksheetABRecord the betterment cost of $18,350 paid in cash.Note: Enter debits before credits.TransactionGeneral JournalDebitCreditRecord entryClear entryView general journal

As per IAS 16, Property plant and equipment An expenditure incurred to increase the productivity of…

Answered: Exerclse 8-14 Ordinary repalrs,…

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter9: Fixed Assets And Intangible Assets

Section: Chapter Questions

Problem 9.3CP: Effect of depreciation on net income Tuttle Construction Co. specializes in building replicas of...

See similar textbooks

Similar questions

Communication Godwin Co. owns three delivery trucks. Details for each truck at the end of the most recent year follow: At the beginning of the year, a hydraulic lift is added to Truck 1 at a cost of 4,500. The addition of the hydraulic lift will allow the company to deliver much larger objects than could previously be delivered. At the beginning of the year, the engine of Truck 2 is overhauled at a cost of 5,000. The engine overhaul will extend the trucks useful life by three years. Write a short memo to Godwins chief financial officer explaining the financial statement effects of the expenditures associated with Trucks 1 and 2.
Effect of depreciation on net income Tuttle Construction Co. specializes in building replicas of historic houses. Tim Newman, president of Tuttle Construction, is considering the purchase of various items of equipment on July 1, 2014, for 400,000. The equipment would have a useful life of five years and no residual value. In the past, all equipment has been leased. For tax purposes, Tim is considering depreciating the equipment, by the straight-line method. He discussed the matter with his CPA and learned that, although the straight-line method could be elected, it was to his advantage to use the Modified Accelerated Cost Recovery System (MACKS) for tax purposes, lie asked for your advice as to which method to use for tax purposes. 1. Compute depreciation for each of the years (2014, 2015, 2016, 2017, 2018, and 2019) of useful life by (a) the straight-line method and (b) MACRS. In using the straight-line method, one-half year's depreciation should be computed for 2014 and 2019.Use the MACRS rates presented in Exhibit 9. 2. Assuming that income before depreciation and income tax is estimated to be 750,000 uniformly per year and that the income tax rate is 40%, compute the net income for each of the years 2014, 2015, 2016, 2017, 2018, and 2019 if (a) the straight-line method is used and (b) MACRS is used. 3. What factors would you present for Tim's consideration in the selection of a depreciation method?
Communication Godwin Co. owns three delivery trucks. Details for each truck at the end of the most recent year follow: Age Expected Useful Life Initial Cost Accumulated Depreciation Truck 1 3 6 22,500 11,250 Truck 2 5 6 26,250 21,875 Truck 3 2 6 28,500 9,500 At the beginning of the year, a hydraulic lift is added to Truck 1 at a cost of 4,500. The addition of the hydraulic lift will allow the company to deliver much larger objects than could previously be delivered. At the beginning of the year, the engine of Truck 2 is overhauled at a cost of 5,000. The engine overhaul will extend the trucks useful life by three years. Write a short memo to Godwins chief financial officer explaining the financial statement effects of the expenditures associated with Trucks 1 and 2.

Recommended textbooks for you

Financial & Managerial Accounting

Accounting

ISBN:

9781285866307

Author:

Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:

Cengage Learning

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Corporate Financial Accounting

Accounting

ISBN:

9781337398169

Author:

Carl Warren, Jeff Jones

Publisher:

Cengage Learning

Financial & Managerial Accounting

Accounting

ISBN:

9781285866307

Author:

Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:

Cengage Learning

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Corporate Financial Accounting

Accounting

ISBN:

9781337398169

Author:

Carl Warren, Jeff Jones

Publisher:

Cengage Learning

Corporate Financial Accounting

Accounting

ISBN:

9781305653535

Author:

Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:

Cengage Learning

Financial & Managerial Accounting

Accounting

ISBN:

9781337119207

Author:

Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS