EXPENDITURES AFTER ACQUISITION Pasta, a restaurant specializing in fresh pasta, installed a pasta cooker in early 2007
Question:
EXPENDITURES AFTER ACQUISITION Pasta, a restaurant specializing in fresh pasta, installed a pasta cooker in early 2007 at a cost of $11,800. The cooker had an expected life of five years and a residual value of
$600 when installed. As the restaurant’s business increased, it became apparent that renovations would be necessary so the cooker’s output could be increased. In January 2010, Pasta spent $8,200 to install new heating equipment and $4,100 to add pressurecooking capability. After these renovations, Pasta estimated that the remaining useful life of the cooker was 10 years and that the residual value was now $1,500.
Required:
. Compute one year’s straight-line depreciation expense on the cooker before the renovations.
. Assume that three full years of straight-line depreciation expense had been recorded on the cooker before the renovations were made. Compute the book value of the cooker after the renovations were made.
. Compute one year’s straight-line depreciation expense on the renovated cooker.
Step by Step Answer:
Cornerstones Of Financial Accounting Current Trends Update
ISBN: 9781111527952
1st Edition
Authors: Jay Rich , Jeff Jones, Maryanne Mowen , Don Hansen