Clarion Contractors completed the following transactions and events involving th

Question

Clarion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business. 2010 Jan.1 Paid $255,440 cash plus $15,200 in sales tax and $2,500 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $34,740 salvage value. Loader costs are recorded in the Equipment account. Jan.3 Paid $3,660 to enclose the cab and install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,110. Dec.31 Recorded annual straight-line depreciation on the loader. 2011 Jan.1 Paid $4,500 to overhaul the loader

Explanation / Answer

Hope this helps. 255440 + 15200+ 2500 = 273140 273140 +3660 = 276800 - (34740 + 1110) = 240950 240950 / 4 = 60237.5 Total cost 281300 Less Accum. Depr. 60237.5 Less Salvage V. 35850 Remaining cost to be depr. = 185213 Revised remaining (4 years original - 1 year + 2) = 5 years Revised Annual Depr. 185213 / 5 = 37042

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