Question - A company purchased a heating system on January 2, 2000 for $250,000. The system had an estimated useful life of 15 years. On January 3, 2013, the company completes a renovation of the system that cost of $35,000 and now expects the system to be more efficient to last eight years beyond the original estimate. The company uses the straight-line method of depreciation.
a. Prepare the journal entry at January 3, 2013 to record the renovation of the heating system.
b. Prepare the journal entry at December 31, 2013, to record the depreciation for 2013.