2. Roberts Company is making significant improvements to some of its assets, as follows. ...
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Accounting
2. Roberts Company is making significant improvements to some of its assets, as follows.
| 1. | It is replacing the old furnace that cost $40,000 and has a $15,000 book value with a new furnace/air conditioner combination. Roberts spent $50,000 in cash and was given a $4,000 trade-in on the old furnace. |
| 2. | The delivery van is being updated with a new $8,000 engine that will increase the useful life of the van by 2 years. The van originally cost $36,000 and has accumulated depreciation of $26,000. |
Required:
| a. | Record the appropriate journal entry for replacing the furnace. |
| b. | When recording the transaction associated with the van there is a choice between two methods. Provide the journal entries for each method. |
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