Ask Question
22 February, 00:15

Gonzo Co. owns a building in Georgia. The building’s historical cost is $970,000, and $440,000 of accumulated depreciation has been recorded to date. During 2011, Gonzo incurred the following expenses related to the building:

Repainted the building

$ 48,000

Major improvement to the plumbing

109,000

Replaced carpet in the plant’s accounting offices

47,600

Added a 7,000 square foot lobby

234,600

Repaired a broken water main

155,800

Required:

1. Which of the costs incurred by Gonzo Co. should be capitalized to the building account?

2. What is the subsequent carrying amount of the building?

+2
Answers (1)
  1. 22 February, 03:10
    0
    1. The cost to be capitalized to building account is $343,600

    2. The subsequent carrying amount of the building is $873,600

    Explanation:

    1. In order to calculate the which of the costs incurred by Gonzo Co. should be capitalized to the building account we would have to use the following formula:

    cost to be capitalize=Major improvement to the plumbing+Added a loby

    cost to be capitalize=$109,000+$234,600

    cost to be capitalize=$343,600

    The cost to be capitalized to building account is $343,600

    2. To calculate the subsequent carrying amount of the building we have to use the following formula:

    subsequent carrying amount=Historical cost+improvements-Accumulated Depreciation

    subsequent carrying amount=$970,000+$343,600-$440,000

    subsequent carrying amount=$873,600

    The subsequent carrying amount of the building is $873,600
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Gonzo Co. owns a building in Georgia. The building’s historical cost is $970,000, and $440,000 of accumulated depreciation has been ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers