Fiona's Italian Market purchased a delivery truck for deliveries for $25,000 at the beginning of 2012.The truck has an estimated life of 5 years,and an estimated residual value of $5,000.The company plans to use the straight-line depreciation method.At the beginning of 2013,the company spent $4000 to replace the truck's transmission.This resulted in a 2-year extension of useful life,but no change in residual value.
A) What type of cost is the $ \$ 4,000 $ ? Explain.

Question

Fiona's Italian Market purchased a delivery truck for deliveries for $25,000 at the beginning of 2012.The truck has an estimated life of 5 years,and an estimated residual value of $5,000.The company plans to use the straight-line depreciation method.At the beginning of 2013,the company spent $4000 to replace the truck's transmission.This resulted in a 2-year extension of useful life,but no change in residual value.
 A) What type of cost is the $ \$ 4,000 $ ? Explain.

Quizplus · Accepted Answer

The Answer of Fiona's Italian Market purchased a delivery truck for deliveries for $25,000 at the beginning of 2012.The truck has an estimated life of 5 years,and an estimated residual value of $5,000.The company plans to use the straight-line depreciation method.At the beginning of 2013,the company spent $4000 to replace the truck's transmission.This resulted in a 2-year extension of useful life,but no change in residual value.
 A) What type of cost is the $ \$ 4,000 $ ? Explain.

Fiona's Italian Market Purchased a Delivery Truck for Deliveries for $25,000