Roberts Company is making significant improvements to some of its assets, as follows. 1. It is replacing the old furnace that cost $40,000 and has a $15,000 book value with a new furnace/air conditioner combination. Roberts spent $60,000 in cash and was given a $3,000 trade-in on the old furnace. 2. The delivery van is being updated with a new $7,000 engine that will increase the useful life of the van by 2 years. The van originally cost $35,000 and has accumulated depreciation of $25,000. Required: a. Record the appropriate journal entry for replacing the furnace. b. When recording the transaction associated with the van there is a choice between two methods. Provide the journal entries for each method. Only use the Van account in the second of the two journal entries.

Roberts Company is making significant improvements to some of its assets, as follows. 1. It is replacing the old furnace that cost $40,000 and has a $15,000 book value with a new furnace/air conditioner combination. Roberts spent $60,000 in cash and was given a $3,000 trade-in on the old furnace. 2. The delivery van is being updated with a new $7,000 engine that will increase the useful life of the van by 2 years. The van originally cost $35,000 and has accumulated depreciation of $25,000. Required: a. Record the appropriate journal entry for replacing the furnace. b. When recording the transaction associated with the van there is a choice between two methods. Provide the journal entries for each method. Only use the Van account in the second of the two journal entries.

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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