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22 June, 13:13

Ryan Company purchased a building on January 1, 2021, for $250,000. In addition, during 2021 the following costs related to the building have been incurred: Utilities $ 12,000 Property tax 4,000 Expansion of the building 53,000 New air-conditioning system 28,000 General maintenance $ 19,000 The amount of expenditures to capitalize for the year (not including the initial purchase of the building) is:

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  1. 22 June, 16:36
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    The answer is $ 81,000

    Explanation:

    Solution

    The expenditure to be capitalized are:

    (1) Expansion of building = 53,000

    (2) New air-conditioning system = 28,000

    53000 + 28000 = 81,000

    Property tax are to expressed, since they have been incurred after acquisition of building and expansion, to he intended use it shall be expensed and not utilized.

    General maintenance and utilities are not at all capital costs, so they shall not be capitalized.
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