Chapter 10, Problem 15E

To determine

Repairs:

Repairs are the expenditures which improves the health of the assets. Now the accounting treatment for repairs expenditure totally depend upon the nature of repair whether it is incurred for the maintenance of the assets or for the improvement of its working life.

Journal Entry:

Journal entry is a way of recording the financial transaction of the company related to certain dates that shows chronological effect in the books of accounts. Journal entries are recorded on the basis of dual aspect accounting method.

Accounting Rules for Journal Entries:

⮚ To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.

⮚ To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

1.

To determine: Building’s age (plant asset age) as of the prior year end balance sheet date.

To determine

To prepare: journal entry to record the cost of the structural repairs paid in cash.

To determine

Book value of the building immediately after the repairs are recorded.

To determine

To prepare: journal entry to record the cost of the structural repairs paid in cash.