In: Accounting
Question 2: Revised depreciation – betterment
Nova Scotia Telecom Company had a truck that was purchased on July
7, 2018, for $36000. The PPE subledger shows the following
information regarding the truck:
A customized tool carrier was constructed and permanently fitted to
the truck on July 3, 2020 at a cost of $9600 cash. The tool carrier
adds to the economic value of the truck. It will be used for the
truck’s remaining life and have a zero-residual value. The useful
life and residual value of the truck did not change as a result of
the addition of the tool carrier.
Required:
1. Record the installation of the tool carrier assuming it is a
component of the truck
2. Calculate depreciation on the truck and its new component, the
tool carrier for the company’s December 31, 2020 year ends
3. Calculate the book value of the truck at December 31, 2020 and
2021