Question 11

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Recording Subsequent Expenditures

After 25% of the useful life had expired on equipment with an original cost of $150,000 and no salvage value, a major component of the equipment is unexpectedly replaced. The old component was expected to last as long as the equipment itself, and the companys accounting records on the component indicate it originally cost $30,000 and had no expected salvage value. The replacement component cost $45,000 and has no usefulness beyond that of the equipment.

Prepare the entries to record the component replacement, assuming a cash purchase. Note: Record debit accounts in alphabetical order using the first letter of the account name.

Account Name	Dr.	Cr.
	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer
To record replacement.