Recording Subsequent Expenditures The plant building of Xon Corporation is old (estimated remaining useful life is 12 years) and needs continuous maintenance and repairs. The company’s accounts show that the building originally cost $300,000; and accumulated depreciation was $200,000 at the beginning of the current year. During the current year, expenditures relating to the plant building are made. Prepare the journal entry to record each of the following expenditures , assuming all items are paid in cash. Instructions Round your answers to the nearest whole number Record debit accounts in alphabetical order using the first letter of the account name. 1. Continuing, frequent, and low-cost repairs: $17,000 Account Name Dr. Cr. 2. Added a new storage shed attached to the building; estimated useful life of 8 years: $36,000 Account Name Dr. Cr. 3. Removed roof with original cost, $40,000; replaced it with guaranteed, modern roof: $50,000 Account Name Dr. Cr. To remove old roof. To record new roof. 4. Unusual and infrequent repairs due to damage from flood; repairs did not increase the use, value, or the economic life of the asset: $6,000 Account Name Dr. Cr. 5. Complete overhaul of the plumbing system (old costs unknown): $12,500 Account Name Dr. Cr.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Recording Subsequent Expenditures
The plant building of Xon Corporation is old (estimated remaining useful life is 12 years) and needs continuous maintenance and repairs. The company’s accounts show that the building originally cost $300,000; and
Prepare the
Instructions
- Round your answers to the nearest whole number
- Record debit accounts in alphabetical order using the first letter of the account name.
1. Continuing, frequent, and low-cost repairs: $17,000
| Account Name | Dr. | Cr. |
|---|---|---|
2. Added a new storage shed attached to the building; estimated useful life of 8 years: $36,000
| Account Name | Dr. | Cr. |
|---|---|---|
|
|
3. Removed roof with original cost, $40,000; replaced it with guaranteed, modern roof: $50,000
| Account Name | Dr. | Cr. |
|---|---|---|
|
|
||
| To remove old roof. | ||
| To record new roof. |
4. Unusual and infrequent repairs due to damage from flood; repairs did not increase the use, value, or the economic life of the asset: $6,000
| Account Name | Dr. | Cr. |
|---|---|---|
5. Complete overhaul of the plumbing system (old costs unknown): $12,500
| Account Name | Dr. | Cr. |
|---|---|---|
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