Champion Contractors completed the following transactions involving equipment. Year 1 January 1 Paid $287,600 cash plus $11,500 in sales tax and $1,500 in transportation (FOB shipping point) for loader. The loader is estimated to have a four-year life and a $20,600 salvage value. Loader costs recorded in the Equipment account. January 3 Paid $4,800 to install air-conditioning in the loader to enable operations under harsher condition increased the estimated salvage value of the loader by another $1,400. ecember 31 Recorded annual straight-line depreciation on the loader. ear 2 January 1 Paid $5,400 to overhaul the loader's engine, which increased the loader's estimated useful life by years. ebruary 17 Paid $820 for minor repairs to the loader after the operator backed it into a tree. ecember 31 Recorded annual straight-line depreciation on the loader. equired: epare journal entries to record these transactions and events.
Champion Contractors completed the following transactions involving equipment. Year 1 January 1 Paid $287,600 cash plus $11,500 in sales tax and $1,500 in transportation (FOB shipping point) for loader. The loader is estimated to have a four-year life and a $20,600 salvage value. Loader costs recorded in the Equipment account. January 3 Paid $4,800 to install air-conditioning in the loader to enable operations under harsher condition increased the estimated salvage value of the loader by another $1,400. ecember 31 Recorded annual straight-line depreciation on the loader. ear 2 January 1 Paid $5,400 to overhaul the loader's engine, which increased the loader's estimated useful life by years. ebruary 17 Paid $820 for minor repairs to the loader after the operator backed it into a tree. ecember 31 Recorded annual straight-line depreciation on the loader. equired: epare journal entries to record these transactions and events.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 4CE: Grandorf Company replaced the engine in a truck for 8,000 and expects the new engine will extend the...
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College