Recording and Reporting of Damaged Capital Assets. Recent river flooding damaged a part of the Town of Brownville Library. The library building is over 70 years old and is located in a part of the town that is on the national historic preservation register. Some of the costs related to the damage included the following:
1. The building wiring had to be replaced. Since the wiring was over 20 years old, replacing the wiring allowed the town to bring the wiring up to current code and accommodate the increasing technology needs of the library.
2. A large section of the interior walls (dry-wall) of the library had to be replaced and painted. The same type of material was used in replacing the interior walls.
3. All hardwood floors were replaced with the same materials.
4. Over 30,000 books suffered water damage.
Required
a. Discuss whether the fact that the library building is in the historic part of town has any role in determining how to record and report the damage and repairs to the library.
b. Discuss how to determine if the library should be considered impaired and, if it is impaired, how accounting and reporting should be handled.
c. Discuss whether you would classify the costs incurred to repair the building as enhancements or replacements.
d. What information would you want before determining how to record and report the damage to the books?