Distinguishing repairs from improvements. Purdy Company acquired two used trucks from Foster Company. Although the trucks were not identical, they both cost $15,000. Purdy knew when it negotiated the purchase price that the first truck required extensive engine repair, estimated to cost $4,000. The repair was made the week after acquisition and actually cost $4,200. Purdy Company thought the second truck was in normal operating condition when it negotiated the purchase price but discovered, after taking possession of the truck, that it required new bearings. The firm made this repair, costing $4,200, during the week after acquisition.
a. What costs should Purdy Company record in the accounts for the two trucks?
b. If the amounts recorded in part a are different, distinguish between the two repairs.