Apac Construction Company purchased a forklift for $108,400 cash. It had an estimated useful life of four years and a $11,100 salvage value. At the beginning of the third year of use, the company spent an additional $9,330 that was related to the forklift. The company’s financial condition just prior to this expenditure is shown in the following statements model.
Required
Record the $9,330 expenditure in the statements model under each of the following independent assumptions. The first event is recorded as an example. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity and NA to indicate the element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.)
a. The expenditure was for routine maintenance.
b. The expenditure extended the forklift’s life.
c. The expenditure improved the forklift’s operating capacity.