Question

Problem 10-4A Computing and revising depreciation; revenue and capital expenditures LO C1, C2, C3

Champion Contractors completed the following transactions and events involving the purchase and operation of equipment in its business.

2016

Jan.		1		Paid $298,000 cash plus $11,920 in sales tax and $1,500 in transportation (FOB shipping point) for a new loader. The loader is estimated to have a four-year life and a $29,800 salvage value. Loader costs are recorded in the Equipment account.
Jan.		3		Paid $5,000 to enclose the cab and install air conditioning in the loader to enable operations under harsher conditions. This increased the estimated salvage value of the loader by another $1,500.
Dec.		31		Recorded annual straight-line depreciation on the loader.

2017

Jan.		1		Paid $4,300 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years.
Feb.		17		Paid $1,075 to repair the loader after the operator backed it into a tree.
Dec.		31		Recorded annual straight-line depreciation on the loader.

Required:

Prepare journal entries to record these transactions and events.

*These are the options for the general journal

Accumulated amortization

Accumulated depletion

Accumulated depreciation—Equipment

Amortization expense

Building

Cash

Depletion expense

Depreciation expense—Equipment

Equipment

Gain on sale of equipment

Goodwill

Impairment loss

Land

Land improvements

Leasehold improvements

Loss from fire

Loss on disposal of equipment

Loss on exchange of assets

Loss on sale of equipment

Mineral deposit

Ore mine

Prepaid rent

Rent expense

Repairs expense—Equipment