Canada Canning Company owns processing equipment

that had an initial #245

Canada Canning Company owns processing equipment that had an initial cost of $106,000,
expected useful life of eight years, and expected residual value of $10,000. Depreciation
calculations are done to the nearest month using the straight-line method, and depreciation is
recorded each December 31.During the equipment's fifth year of service, the following
expenditures were made:Jan. 7 Lubricated and adjusted the equipment to maintain optimum
performance, at a cost of $500.Mar. 13 Replaced belts, hoses, and other parts that were
showing signs of wear on the equipment, at a cost of $350.June 28 Completed a $14,000
overhaul of the equipment. The work included the installation of new computer controls to
replace the original controls, which had become technologically obsolete. As a result of this
work, the estimated useful life of the equipment was increased to 10 years and the estimated
residual value was increased to $11,000.Required:a. Prepare journal entries to record each of
the above transactions.b. Calculate the depreciation expense that should be recorded for this
equipment in the fourth year of its life, in the fifth year of its life (the year in which the above
transactions took place), and in the sixth year of its life.View Solution:
Canada Canning Company owns processing equipment that had an initial

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