Peloton Company constructed a building at a cost of $2,856,000 and occupied it b

Question

Peloton Company constructed a building at a cost of $2,856,000 and occupied it beginning in January 1993. It was estimated at that time that its life would be 40 years, with no salvage value. In January 2013, a new roof was installed at a cost of $357,000, and it was estimated then that the building would have a useful life of 25 years from that date. The cost of the old roof was $214,200. What JOURNAL entries should be made in 2013 to record the replacement of the roof? Loss on Disposal of Assets (debit) Accumulated depreciation-Building (debit) Building (credit) Building (debit) Cash (credit)

Explanation / Answer

The Journal entries are as below 01/01/2013 Building Account Dr $3,57,000 To Cash Account $3,57,000 (Being new Roof was installed to the building) 01/01/2013 Loss on Disposal of Assets Account Dr $1,07,100 Accumulated Depreciation(Building) Dr $1,07,100 To Building Account $2,14,200 (Being Old roof disposed and loss is accounted)

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