A Company Paid $314,000 for a Machine That Was Expected

Essay

A company paid $314,000 for a machine that was expected to last five years and to have a residual value of $40,000. During the third year of the machine's life, $37,000 cash was paid for replacement parts that were expected to increase the machine's productivity by 10% each year. Prepare the journal entry to record the $37,000 cost incurred in the third year.