Help Save & Exit Submit Exercise 8-15 Extraordinary repairs; plant asset age LO

Question

Help Save & Exit Submit Exercise 8-15 Extraordinary repairs; plant asset age LO C3 Martinez Company owns a building that appears on its prior year-end balance sheet at its original $500,000 cost less $375,000 repairs extend its useful life for 5 years beyond the 20 years originally estimated 1. Determine the building's age (plant asset age) as of the prior year-end balance sheet date. accumulated depreciation. The building is depreciated on a straight-line basis assuming a 20-year life and no salvage value. During the first week in January of the current calendar year, major structural repairs are completed on the building at a $50,000 cost. The of the 15 years 2. Prepare the entry to record the cost of the structural repairs that are paid in cash View transaction list View journal entry works Transaction 50,000 Building Cash 50,000 Prev 1 of 1 Next5

Explanation / Answer

1) age of the building 15 years Depreciation expense (500,000)/20 25000 accumulated depreciation =375000/25000 15 2) TR General Journal Debit credit Building 50,000 cash 50,000 3) Adjustment entry for Depreciation TR General Journal Debit credit Depreciation expense 17,500 Accumulated depreciation 17,500 original cost 500,000 Accumulated depreciation -375000 book value before repairs 125,000 Add:cos of repairs 50,000 cost to be depreciated 175,000 Remaining useful life (20-15+5) 10 Depreciation expense 17,500

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