Answered: convert them into Experience Plus…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Accounting

In early 2019, ETI incurred significant costs to renovate two of its existing theatres in order to
convert them into Experience Plus theatres. These two theatres are located in buildings that ETI
owns. Details of costs incurred to construct and promote the Experience Plus theatres are as
follows:
Removal of seating $ 10,000
Purchase of new seating $ 92,000
Installation of new seating $ 8,000
Addition of kitchen facilities $ 70,000
Advertising and promotion of new theatres $200,000
Interest on renovation loan $ 28,000

These costs were capitalized and added to the carrying value of the buildings.

Under ASPE, should the cost be capitalized or expensed?

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