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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bridge City Consulting bought a building and the land on which it is located for $182,000 cash.The land is estimated to represent 70 percent of the purchase price. The company paid $22,000 forbuilding renovations before it was ready for use.Required:1. Explain how the renovation costs should be accounted for.2. Give the journal entry to record all expenditures. Assume that all transactions were for cashand they occurred at the start of the year.3. Compute straight-line depreciation on the building at the end of one year, assuming an estimated 12-year useful life and a $4,600 estimated residual value.4. What should be the book value of ( a ) the land and ( b ) the building at the end of year 2?
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