D Bridge City bought a building and land on which it is located for $182,000 cash. The land is estimated to represent 70% of the purchase price. The company paid $22,000 for building renovations before it was ready for use. 1. Explain how the renovation costs are to be accounted for (capitalized or expensed?). 2. Give the journal entry to record all expenditures. Assume that all transactions were for cash and they occurred at the start of the year. 1-Jan Land Building Cash Building E Cash 3. Compute straight line depreciation on the building at the end of one year, assuming an estimated 12 year useful life and a 4600 estimated residual value.
D Bridge City bought a building and land on which it is located for $182,000 cash. The land is estimated to represent 70% of the purchase price. The company paid $22,000 for building renovations before it was ready for use. 1. Explain how the renovation costs are to be accounted for (capitalized or expensed?). 2. Give the journal entry to record all expenditures. Assume that all transactions were for cash and they occurred at the start of the year. 1-Jan Land Building Cash Building E Cash 3. Compute straight line depreciation on the building at the end of one year, assuming an estimated 12 year useful life and a 4600 estimated residual value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:D
Bridge City bought a building and land on which it is located for $182,000 cash.
The land is estimated to represent 70% of the purchase price. The company paid $22,000 for
building renovations before it was ready for use.
1. Explain how the renovation costs are to be accounted for (capitalized or expensed?).
2. Give the journal entry to record all expenditures. Assume that all transactions were for cash and they
occurred at the start of the year.
D
1-Jan Land
Building
Cash
Building
Cash
3. Compute straight line depreciation on the building at the end of one year, assuming an estimated 12 year
useful life and a 4600 estimated residual value.
4. What should be the book value of the land and building at the end of year #2?
Building cost
E
less: accum depr
Book Value
Land
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