Urgent help on accounting homework please? Elton Enterprises has recently upgrad

Question

Urgent help on accounting homework please?

Elton Enterprises has recently upgraded its delivery truck. The various expenditures related to the upgrades occurred at the end of year 2 and are as follows:

Required:

1) Determine whether the expenditure is a capital improvement or ordinary operating expense.

2) Suppose the delivery truck with an original cost of $35,000 was being depreciated using straight line depreciation over 5 years and was expected to have a $3,000 residual value, however the upgrades are expected to increase the useful life from 5 years to 7 years. Based on the upgrades above, what is the revised depreciation expense for years 3 through 7?

Item and amounts Capital expenditure/Operating expense 1) Oil changes, $20 2) All four tires on truck replaced, $800 3) Engine replacement, $900 4) Changed truck colors from blue to green, $500 5) Replaced brakes, $400

Explanation / Answer

1.Oil changes $ 20 Operating Expense- Repeated & regular expense -required for operating the truck 2.All four tyres on truck replaced $ 800 Operating expense- to maintain the truck in running condition 3.Engine Replacement $ 900 Capital expenditure- expense not of a regular nature-improves/upgrades the condition of the asset 4. Changed truck colours from blue to green $ 500 Operating expense- incurred to maintain the truck and does not enhance value 5.Replced brakes $400 Operating expense- to maintain the truck in running condition

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.