eloaded because a problem occurred Ex 815 Help Save Exit Ch

eloaded because a problem occurred. Ex 8-15 Help Save & Exit Check my Martinez Company owns a building that appears on its prior year-end balance sheet at its original $690,000 cost less $517,500 accumulated depreciation. The building is depreciated on a straight-line basis assuming a 20-year life and no salvage value. During the first week in January of the current calendar year, major structural repairs are completed on the building at a $69,000 cost. The repairs extend its useful life for 5 years beyond the 20 years originally estimated. 1. Determine the building\'s age (plant asset age) as of the prior year-end balance sheet date. years 2. Prepare the entry to record the cost of the structural repairs that are paid in cash. View transaction list Journal entry worksheet Record the $69,000 cost of the structural repairs that are paid in cash. Note: Enter debits before credits Prev 1 of 1 I Next >

Solution

Ans.1 Age of Building =   Accumulated depreciation / Annual depreciation 517500 / 34500 15 years *Annual depreciation =   (Cost - salvage value) / useful life (690000 - 0) / 20 34500 Ans.2 Transaction General Journal Debit Credit 1 Building 69000 To Cash 69000 Ans.3 Cost of Building (690000+69000) 759000 Less: Accumulated depreciation -517500 Revised book value of building 241500 *Cost of structural repairs is included in the purchase cost of building. Ans.4 Current year\'s depreciation =   (Revised book value - Revised salvage value) / Estimated remaining life in years (241500 - 0) / 10 24150 *Estimated remaining life in years =   Useful life + Extended years - Age of building 20 + 5 - 15 10 years Adjusting Entry: Transaction General Journal Debit Credit 1 Depreciation expenses 24150 Accumulated Depreciation on building 24150