Mays Corporation purchased a new truck on January 1,2016 for $65,000 cash.Mays estimated salvage value of $10,000 at the end of the useful life of 5 years.On January 1,2018 Mays had to replace the engine of the truck paying $4,000 cash.Due to the replaced engine,Mays estimates that the truck will continue a productive life for another four years.
Required:
a)Prepare the journal entry to record the cost of the new engine.
b)Assuming straight-line depreciation is used,calculate the depreciation expense for 2018.

Question

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The Answer of Mays Corporation purchased a new truck on January 1,2016 for $65,000 cash.Mays estimated salvage value of $10,000 at the end of the useful life of 5 years.On January 1,2018 Mays had to replace the engine of the truck paying $4,000 cash.Due to the replaced engine,Mays estimates that the truck will continue a productive life for another four years.
Required:
a)Prepare the journal entry to record the cost of the new engine.
b)Assuming straight-line depreciation is used,calculate the depreciation expense for 2018.

Mays Corporation Purchased a New Truck on January 1,2016 for $65,000