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A truck was acquired on July 1, 2023, for $189,000. The truck had a six-year useful life and an estimated salvage value of $21,000. The straight-line method of depreciation was used. On January 1, 2026, the truck was overhauled for $17,500, which extended the useful life of the truck for an additional two years beyond that originally estimated (salvage value is still estimated at $21,000). In computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned.   Instructions Prepare the appropriate entries for January 1, 2026 and December 31, 2026

A truck was acquired on July 1, 2023, for $189,000. The truck had a six-year useful life and an estimated salvage value of $21,000. The straight-line method of depreciation was used. On January 1, 2026, the truck was overhauled for $17,500, which extended the useful life of the truck for an additional two years beyond that originally estimated (salvage value is still estimated at $21,000). In computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned.   Instructions Prepare the appropriate entries for January 1, 2026 and December 31, 2026

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A truck was acquired on July 1, 2023, for $189,000. The truck had a six-year useful life and an estimated salvage value of $21,000. The straight-line method of depreciation was used. On January 1, 2026, the truck was overhauled for $17,500, which extended the useful life of the truck for an additional two years beyond that originally estimated (salvage value is still estimated at $21,000). In computing depreciation for annual adjustment purposes, expense is calculated for each month the asset is owned.

 

Instructions

Prepare the appropriate entries for January 1, 2026 and December 31, 2026 

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