Purchase Solution

Adjustment to depreciation of a truck which was overhauled

Not what you're looking for?

Ask Custom Question

A truck was acquired on July 1, 2004 at a cost of $270,000. The truck had a six-year useful life and an estimated salvage value of $30,000. The straight-line method of depreciation was used.

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.

Purchase this Solution
Solution Summary

The solution provides the six journal entries to be recorded for the purchase, depreciation, improvement of the truck.

Solution Preview

See Excel for more readable response.

Debit Credit

7/1/2004 Truck 270,000
Cash 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 ...

Purchase this Solution
Free BrainMass Quizzes
Learning Lean

This quiz will help you understand the basic concepts of Lean.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

View More Free Quizzes
Related BrainMass Solutions

  • A truck was acquired on July 1, 2004 at a cost of $216,000.

    On January 1, 2007 the truck was overhauled at a cost of $20,000 which extended the useful life of the truck by two years beyond the original estimated useful life. The salvage value was estimated to then be $22,000.

  • Financial Statements and Accounting Cycle

    The reference materials are not expected to have a salvage value. The truck is expected to last 5 years and to have a salvage value of $2,500.

  • Saluki Company Accounting Changes and Error Corrections

    's net income was properly determined after giving effect to the following accounting changes, error corrections, etc. which took place during the year.

  • Long-term assets are defined as assets that extend

    Quick Freight Trucking owned a truck which cost $30,000 when it was purchased on January 1, 2007. It had accumulated depreciation of $18,000 at December 31, 2008.

  • Tangible and Intangible assets

    equipment completely overhauled at a cost of $7,500.

  • Account Adjustments

    Purchased a large quantity of office supplies of credit 3A+ 22A+ d. Bought a three-year insurance policy and paid in full 4A+ 1A- e. Declared a dividend to e paid in 60 days. 33 23 f. Depreciation on trucks is recorded 55 6 g.

  • 10 Multiple Choice Accounting questions

    A truck that cost $12,000 and on which $10,000 of accumulated depreciation has been recorded was disposed of for $3,000 cash. The entry to record this event would include a A) gain of $1,000. B) loss of $1,000.

  • 10 MULTIPLE CHOICE INTRO ACCOUNTING PROBLEMS

    A truck that cost $12,000 and on which $10,000 of accumulated depreciation has been recorded was disposed of for $3,000 cash. The entry to record this event would include a A) gain of $1,000. B) loss of $1,000.

  • Audit Evidence and Conclusion

    The company sold 15 of its old trucks to Virgin Distributors, a new company owned by the brother of the company's chief executive officer. The equipment was old, and a gain of $70,000 on the sale was credited to income. Required a.

View More Related Solutions