Sequoia Construction Company purchased a forklift for $110,000 cash It had an estimated useful life of four years and a $10,000 salvage value At the beginning of the third year of use, the company spent an additional $8,000 that was related to the forklift The companys financial condition just prio...

a Assets Equity Rev Exp Net Inc Cash Flow Cash Book Value of Forklift ...

Sequoia Construction Company purchased a forklift for $110,000 cash. It had an estimated useful life of four

Question:

Sequoia Construction Company purchased a forklift for $110,000 cash. It had an estimated useful life of four years and a $10,000 . At the beginning of the third year of use, the company spent an additional $8,000 that was related to the forklift. The company€™s financial condition just prior to this expenditure is shown in the following statements model.

Required
Record the $8,000 expenditure in the statements model under each of the following independent assumptions:
a. The expenditure was for routine maintenance.
b. The expenditure extended the forklift€™s life.
c. The expenditure improved the forklift€™s operatingcapacity.

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...