Gonzo Co. owns a building in Georgia. The buildings historical cost is $970,000, and $440,000 of accumulated

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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 2014, 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 prior to recording 2014 depreciation expense?

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Financial Reporting and Analysis

ISBN: 978-0078025679

6th edition

Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon

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