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Unformatted text preview: 2009-09-091EXTRAORDINARY REPAIRS2009-09-09Extraordinary Repairs Topic Slides2Extraordinary RepairsWhat is an extraordinary repair?A non-regular major overhaul of a fixed asset that will extend the life of the asset beyond its original estimate.2009-09-0922009-09-09Extraordinary Repairs Topic Slides3Accounting Procedure1.Amortize the asset up to the point of the repair.2.Account for the repair:Dr Accumulated amortization (or Asset account)CrCash (or A/P)3.Calculate the asset's new historical cost and new useful life.4.Amortize the asset for the rest of the period using the calculated data.2009-09-09Extraordinary Repairs Topic Slides4Extraordinary Repair ExamplecA $10,000 photocopier, purchased on the opening day of the business (January 1, 1995) was amortized on a straight-line basis with a useful life of 9 years and a salvage value of $1,000. On April 1, 1999, a $3,000 overhaul was undertaken that was expected to extend the useful life of the asset by two years. Fiscal year end is December 31.December 31....
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This note was uploaded on 11/09/2010 for the course BUSINESS 2257 taught by Professor Iandunn during the Fall '10 term at UWO.
- Fall '10
- Financial Accounting