Calculator Events Subsequent to Acquisition The following expenditures were among those incurred by Jensen Corporation during the year ended December 31, 2016: Replacement of tiles on portion of roof $4,000 that had been leaking Overhaul of machinery that is expected to extend its useful life for another 2 years 6,000 How much should be charged to repairs and maintenance in 2016? $6,000 $10,000 $4,000 $0 Instructions Rick's Towing Company in Birmingham, Alabama, owns three tow trucks. During the current year, Rick performed maintenance on the trucks and realized he had to make improvements to the engines on two of his trucks. The improvements totaled $55,000 Required: Prepare the journal entries Rick may make under two alternative methods for the improvements made to his trucks. Previous All work saved. Ema Instructor Submit Calculator Capital Lease East Company leased a new machine from North Company on May 1, 2016, under a lease with the following information 10 years Lease term Annual rental payable at beginning of each lease year $40,000 Useful life of machine 12 years Implicit interest rate 14% Present value factor for an annuity of 1 in advance for 10 periods at 14% 5.95 Present value factor for 1 for 10 periods at 14% 0.27 East has the option to purchase the machine on May 1, 2023, by paying $50,000, which approximates the expected fair value of the machine on the option exercise date. On May 1, 2016. East should record a capitalized lease asset of: a $251,500 b. $224,500 c. $198,000 d. $238,000 Previous Next > All work saved Email Instructor Submit Test for Grading Calculator Capital Leases A lessee accounts for a capital lease by: a. Recording the future value of the minimum lease payments as both an asset and a liability. b. Depreciating the leased asset over its economic life when there's a bargain purchase option. c. Recognizing a portion of each lease payment as an increase in the leased asset. d. Recognizing a portion of each payment as depreciation expense