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???? no idea on this on. I feel like the way I want to answer it is too simple and this seems kinda like a
???? no idea on this on. I feel like the way I want to answer it is too simple and this seems kinda like a trick question.
On January 1, 2018, KC Power Company overhauled four turbine engines that generate power for customers. The overhaul resulted in a slight increase in the capacity of the engines to produce power. Such overhauls occur regularly at two-year intervals and have been treated as maintenance expense in the past. Management is considering whether to capitalize this year's $250,000 cash cost in the engine asset account (fixed assets on the Balance Sheet) or to expense it as a maintenance expense. Assume that the engines have a remaining useful life of two years and no expected salvage value. Also assume straight-line depreciation. REQUIRED Determine the amount of expense KC would recognize in 2018 and 2019 if the cost were recognized as maintenance expense, not capital. a b Determine the effect of the overhaul on cash flow from operating activities for 2018 and 2019 if the cost were recognized as maintenance expense, not capital. Determine the amount of additional depreciation expense KC would recognize in 2018 and 2019 if the cost were capitalized (recorded to the balance sheet) in the Engine account or Fixed Assets account. c d Determine the effect of the overhaul on cash flow from operating activities for 2018 and 2019 if the cost were capitalized and expensed through depreciation charges
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