[The following information applies to the questions displayed below.] Hulme Comp

Question

[The following information applies to the questions displayed below.] Hulme Company operates a small manufacturing facility as a supplement to its regular service activities. At the beginning of 2014, an asset account for the company showed the following balances: Manufacturing equipment Accumulated depreciation through 2013 $141100 65,700 During 2014, the following expenditures were incurred for the equipment: Routine maintenance and repairs on the equipment Major overhaul of the equipment that improved efficiency on January 2, 2014 $ 1,000 15,000 The equipment is being depreciated on a straight-line basis over an estimated life of 17 years with a $17,000 estimated residual value. The annual accounting period ends on December 31.

Explanation / Answer

Annual depreciation=(141100-17000)/17= $7300 1 Depreciation expense 7300          Accumulated depreciation-Equipment 7300 2 Remaining life=17-(65700/7300)= 8 years 3 Repairs and maintenance expense 1000           Cash 1000 Equipment 15000           Cash 15000

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