Question
Goodwin Co. owns three delivery trucks. Details for each trust at the end of the most recent year follow: Age Expected Useful Life Initial Cost
Goodwin Co. owns three delivery trucks. Details for each trust at the end of the most recent year follow:
Age | Expected Useful Life | Initial Cost | Accumulated Depreciation | |
Truck 1 | 3 | 6 | $22,500 | $11,250 |
Truck 2 | 5 | 6 | 26,250 | 21,875 |
Truck 3 | 2 | 6 | 28,500 | 9,500 |
At the beginning of the year, a hydraulic lift is added to Truck 1 at a cost of $4,500. The addition of the hydraulic lift will allow the company to deliver much larger objects than could previously be delivered.
At the beginning of the year, the engine of Truck 2 is overhauled at a cost of $5,000. The engine overhaul will extend the truck's useful life by three years.
Instructions
Write a short memo to Goodwin's chief financial officer explaining the financial statement effects of the expenditures associated with Trucks 1 and 2.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started