Thank you for visiting Bill s Wrecker Service has just completed a minor repair on a tow truck The repair cost was 710 and the book value prior to. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
The book value that should appear on the balance sheet for the tow truck is $4,600, and for the building, it should be $0 after the roof replacement.
After the completion of the minor repair on the tow truck, the book value that should appear on the balance sheet for the tow truck and the building can be calculated. The repair cost for the tow truck was $710, and the book value prior to the repair was $5,310.
Additionally, the company spent $8,500 to replace the roof on the building, which extended its life by five years. Prior to the roof replacement, the Building account was recorded at $90,400, and the Accumulated Depreciation account was at $38,300.
For the tow truck, the book value after the repair can be calculated as follows:
Book value after repair = Previous book value - Repair cost
Book value after repair = $5,310 - $710 = $4,600
Regarding the building, the book value after the roof replacement is determined by considering the replacement cost and the previous book value:
Depreciation expense for the building = (Previous book value - Accumulated Depreciation) / Remaining useful life
Depreciation expense = ($90,400 - $38,300) / 5 = $10,420 per year
Since the new roof extends the building's life by five years, the additional depreciation expense is $10,420 x 5 = $52,100. Therefore, the new book value of the building after the roof replacement can be calculated as follows:
Book value after roof replacement = Previous book value - Accumulated Depreciation - Additional depreciation expense
Book value after roof replacement = $90,400 - $38,300 - $52,100 = $0
Learn more about Accumulated Depreciation here :
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