Question
Clarion Co. completed the following transactions and events involving the purchase and operation of equipment in its business. 2016 Jan. 1 Paid $300,000 cash plus
Clarion Co. completed the following transactions and events involving the purchase and operation of equipment in its business.
2016
Jan.
1
Paid $300,000 cash plus $30,000 in sales tax and $12,500 in transportation (FOB shipping point) for a new loader, which is estimated to have a four-year life and a $25,500 salvage value. Loader costs are recorded in the Equipment account.
Jan.
3
Paid $25,000 to enclose the cab and install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,500.
Dec.
31
Recorded double-declining balance depreciation on the loader.
2017
Jan.
1
Paid $40,500 to overhaul the loaders engine, which increased the loaders estimated useful life by two years.
Feb.
17
Paid $1,000 to repair the loader after the operator backed it into a tree.
Dec.
31
Recorded double-declining balance depreciation on the loader.
Dec.
31
Sold the loader for $250,000 cash.
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