Guilford Company's Air-Conditioning System Has Just Completed the Eighth Year

Essay

Guilford Company's air-conditioning system has just completed the eighth year of an estimated ten-year life.The system cost $30,000 and now has accumulated depreciation of $24,000.At the beginning of the ninth year,the company expects to spend $8,000 on a complete renovation of the system and expects the total life of the system to be fifteen years.Neither the capacity of the system nor the residual value was increased.The company uses the straight-line method to determine depreciation.Determine the following: (a)the account debited for the cost of renovation,(b)the carrying value of the system after renovation,and (c)the depreciation expense for the ninth year.