Expenditures after Acquisition}

Murray's Fish Market, a store that specializes in providing fresh fish to the Halifax, Nova Scotia, area, installed a new refrigeration unit in early 2015 at a cost of \(\$ 27,500\). The refrigeration unit had an estimated life of eight years and a residual value of \(\$ 500\) when installed. As the fish market's business increased, it became apparent that renovations were necessary so that the capacity of the refrigeration unit could be increased. In January 2018, Murray's spent \(\$ 18,785\) to install an additional refrigerated display unit (that was connected to the original unit) and replace the refrigeration coils. After this addition and renovation, Murray's Fish Market estimated that the remaining useful life of the original refrigeration unit was 12 years and that the residual value was now \(\$ 1,000\).

\section*{Required:}

1. Compute one year's straight-line depreciation expense on the refrigeration unit before the addition and renovations.

2. Assume that three full years of straight-line depreciation expense were recorded on the refrigeration unit before the addition and renovations were made. Compute the book value of the refrigeration unit immediately after the renovations were made.

3. Compute one year's straight-line depreciation expense on the renovated refrigcration unit.

\section*{OBJECTIVE 5 Problem