Finlay Limited constructed a building at a cost of $2.8 million and has occupied it since January
Question:
Finlay Limited constructed a building at a cost of $2.8 million and has occupied it since January 1997. It was estimated at that time that its life would be 40 years, with no residual value. In January 2017, a new roof was installed at a cost of $370,000, and it was estimated then that the building would have a useful life of 25 years from that date. The cost of the old roof was $190,000 and was capitalized in the Buildings account at that time. Finlay Limited follows IFRS for its financial statements.
Instructions
(a) What amount of depreciation was charged annually for the years 1997 through 2016? (Assume straight-line depreciation.)
(b) What entry should be made in 2017 to record the roof replacement? Is there an alternative entry available under ASPE?
(c) Prepare the entry in January 2017 to record the revision in the building's estimated life, if necessary.
(d) What amount of depreciation should be charged for the year 2017?
Step by Step Answer:
a 2800000 40 70000 b Loss on Disposal of Buildings 95000 Accumulated Depreciation x Buildings 190000 ...View the full answer
Intermediate Accounting
ISBN: 978-1119048534
11th Canadian edition Volume 1
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
