A truck was acquired on 08/01/2004 at a cost of $216000. the truck had a six year useful life and an estimated salvage value of $24000. the straight line method of depreciation was used. On 01/01/2007 the truck was overhauled at the cost of $20000, which extended the useful life of truck for an additional 2 years beyond that originally estimated(salvage value is still estimated at $24000). In computing depreciation for annual adjustment purposes, expenses is calculated for each month the asset is owned.
prepare the appropriate entries for 01/01/2007 and 12/31/2007