E9.22 (LO 4) Groupwork (Analysis of Subsequent Expenditures) Donovan Resources Group has been in its plant facility for 15 years. Although the plant is quite functional, numerous repair costs are incurred to maintain it in sound working order. The company's plant asset book value is currently $800,000, as indicated below. Original cost Accumulated depreciation Book value $1,200,000 400,000 $ 800,000 During the current year, the following expenditures were made to the plant facility. a. Because of increased demands for its product, the company increased its plant capacity by building a new addition at a cost of $270,000. b. The entire plant was repainted at a cost of $23,000. c. The roof was an asbestos cement slate. For safety purposes, it was removed and replaced with a wood shingle roof at a cost of $61,000. Book value of the old roof was $41,000. d. The electrical system was completely updated at a cost of $22,000. The cost of the old electrical system was not known. It is estimated that the useful life of the building will not change as a result of this updating. e. A series of major repairs were made at a cost of $47,000, because parts of the wood structure were rotting. The cost of the old wood structure was not known. These extensive repairs are estimated to increase the useful life of the building. Instructions Indicate how each of these transactions would be recorded in the accounting records.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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E9.22 (LO 4) Groupwork (Analysis of Subsequent Expenditures) Donovan Resources Group has been in its plant facility for 15 years. Although the plant is quite functional,
numerous repair costs are incurred to maintain it in sound working order. The company's plant asset book value is currently $800,000, as indicated below.
Original cost
Accumulated depreciation
Book value
$1,200,000
400,000
$ 800,000
During the current year, the following expenditures were made to the plant facility.
a. Because of increased demands for its product, the company increased its plant capacity by building a new addition at a cost of $270,000.
b. The entire plant was repainted at a cost of $23,000.
c. The roof was an asbestos cement slate. For safety purposes, it was removed and replaced with a wood shingle roof at a cost of $61,000. Book value of the old roof was $41,000.
d. The electrical system was completely updated at a cost of $22,000. The cost of the old electrical system was not known. It is estimated that the useful life of the building will not change
as a result of this updating.
e. A series of major repairs were made at a cost of $47,000, because parts of the wood structure were rotting. The cost of the old wood structure was not known. These extensive repairs
are estimated to increase the useful life of the building.
Instructions
Indicate how each of these transactions would be recorded in the accounting records.
Transcribed Image Text:E9.22 (LO 4) Groupwork (Analysis of Subsequent Expenditures) Donovan Resources Group has been in its plant facility for 15 years. Although the plant is quite functional, numerous repair costs are incurred to maintain it in sound working order. The company's plant asset book value is currently $800,000, as indicated below. Original cost Accumulated depreciation Book value $1,200,000 400,000 $ 800,000 During the current year, the following expenditures were made to the plant facility. a. Because of increased demands for its product, the company increased its plant capacity by building a new addition at a cost of $270,000. b. The entire plant was repainted at a cost of $23,000. c. The roof was an asbestos cement slate. For safety purposes, it was removed and replaced with a wood shingle roof at a cost of $61,000. Book value of the old roof was $41,000. d. The electrical system was completely updated at a cost of $22,000. The cost of the old electrical system was not known. It is estimated that the useful life of the building will not change as a result of this updating. e. A series of major repairs were made at a cost of $47,000, because parts of the wood structure were rotting. The cost of the old wood structure was not known. These extensive repairs are estimated to increase the useful life of the building. Instructions Indicate how each of these transactions would be recorded in the accounting records.
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