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New Word 2007 Document (8) - $0 Overhaul 6 Cost $20,000...

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Schmidt Corporation is an international provider of freight services that follows international GAAP. Its fleet of vehicles includes a truck that is carried in its books as "VC1-016". It was acquired two years ago at a cost of $150,000 and has since been depreciated on a straight-line basis. By December 31, 2010 it had a net book value of $97,000 As part of its commitment to safety and as required by its insurer, the company has a policy to overhaul its trucks after every 50,000 km's. The associated costs of the overhauls are tracked in separate accounts. At December 31, 2010 the balances for VC1-016 are as follows: Overhauls # 1 - 5: Accumulated Depreciation:
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Unformatted text preview: $0 Overhaul # 6: Cost : $20,000 Less: Accumulated Depreciation: ($16,400) Net book value $3,600 On January 1, 2011, after the driver had reported problems with the truck's engine, a decision was made to do an early overhaul (i.e. 9,000 km prior to the next scheduled overhaul). The overhaul was completed on January 7, 2011 at a cost of $28,000. Because of a slowdown in the economy, the truck only operated for 21,000 km for the remainder of 2011. Instructions Prepare the appropriate journal entries for 2011 relating to the truck's overhaul....
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