Patterson Company pays $262,500 for equipment expected to last four years and have a $30,000 salvage value

Question:

Patterson Company pays $262,500 for equipment expected to last four years and have a $30,000 . Prepare journal entries to record the following costs related to the equipment.
1. During the second year of the equipment’s life, $21,000 cash is paid for a new component expected to increase the equipment’s productivity by 10% a year.
2. During the third year, $5,250 cash is paid for normal repairs necessary to keep the equipment in good working order.
3. During the fourth year, $13,950 is paid for repairs expected to increase the useful life of the equipment from four to five years.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...