Champion contractors completed the following transactions involving equipment. year 1 jan. 1 paid $270,000 cash plus $10,800 in sales tax and $1,800 in transportation (fob shipping point) for a new loader. the loader is estimated to have a four-year life and a $27,000 salvage value. loader costs are recorded in the equipment account. jan. 3 paid $3,000 to install air conditioning in the loader to enable operations under harsher conditions. this increased the estimated salvage value of the loader by another $900. dec. 31 recorded annual straight-line depreciation on the loader. year 2 jan. 1 paid $4,500 to overhaul the loader’s engine, which increased the loader’s estimated useful life by two years. feb. 17 paid $1,125 for minor repairs to the loader after the operator backed it into a tree. dec. 31 recorded annual straight-line depreciation on the loader.