Determine the book value of the engine


Response to the following problem:

Northeast Railroad Company overhauled a diesel motor on one of its railroad engines at a cost of $110,000 on June 30, 2006. The engine was purchased on January 1, 2000, for $280,000, with an estimated original useful life of 20,000 hours and a residual value of $50,000. As of June 30, 2006, the engine had been used 15,000 hours since its original purchase. The overhaul increased the remaining useful life of the engine to 24,000 hours with no change in residual value. After the overhaul, the engine was used for 2,400 hours for the remainder of 2006.

a. Record the journal entry for the overhaul costs incurred during June 2006.

b. Record the journal entry for the depreciation expense on the overhauled engine for the remainder of 2006.

c. Determine the book value of the engine on December 31, 2006.

 

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Cost Accounting: Determine the book value of the engine
Reference No:- TGS02131376

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