A Company Purchased a Cooling System on January 2 for $225,000

question 152

Essay

A company purchased a cooling system on January 2 for $225,000. The system had an estimated useful life of 15 years. After using the system for 13 full years, the company completed a renovation of the system at a cost of $33,000 and now expects the system to be more efficient and last 8 years beyond the original estimate. The company uses the straight-line method of depreciation.
(a) Prepare the journal entry at January 3, to record the renovation of the cooling system.
(b) Prepare the journal entry at December 31, to record the revised depreciation for the thirteenth year.

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Definitions:

Distribution Centers

Specialized buildings that are designed to store products for retailers or manufacturers and distribute them to various destinations efficiently.

Frequent Replenishment

The practice of restocking inventory more often to ensure a high level of product availability and customer satisfaction.

Information Sharing

The practice of exchanging information between parties, ensuring that all stakeholders in a process or system have the data necessary to make informed decisions.

Analytics

Analytics involves the systematic computational analysis of data or statistics, used for the discovery, interpretation, and communication of meaningful patterns in data.