On January 1, 2007, the truck was overhauled at a cost of $25,000, which extended the useful life of the truck for an additional two years beyond that originally estimated (salvage value is still estimated at $30,000). In computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned.
Prepare the appropriate entries for January 1, 2004 and December 31, 2007.
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7/1/2004 Truck 270,000
To record purchase of new truck on 7-1-2004
12/31/2004 Depreciation expense 20,000
Accumulated depreciation 20,000
To record half year of depreciation calculated
at 270,000 - salvage value of ...
The solution provides the six journal entries to be recorded for the purchase, depreciation, improvement of the truck.