A Company Purchased a Heating System on January 2 for $225,000

Essay

A company purchased a heating system on January 2 for $225,000. The system had an estimated useful life of 15 years. On January 3 of the thirteenth year, the company completed a renovation of the system at a cost of $33,000 and now expects the system to be more efficient and last 8 years beyond the original estimate. The company uses the straight-line method of depreciation.
(a) Prepare the journal entry at January 3, to record the renovation of the heating system.
(b) Prepare the journal entry at December 31, to record the revised depreciation for the thirteenth year.