(If consideration of the topics of involuntary and voluntary dispositions has been deferred to Chapter 8, this problem should also be deferred.)
Elaine Barblaik owns an apartment building which she holds for rental income. In November 2011, Elaine settled with municipal authorities on expropriation proceeds for the property including the building. The agreed expropriation proceeds for the building and the separate sale proceeds for the appliances and fixtures are indicated in the following data:

Since negotiations had been prolonged, Elaine was able to anticipate the approximate date of settlement and, as a result, she was able to replace in 2012 the assets expropriated.
Replacement cost for the building and the cost of new appliances and fixtures were as follows:
Building $1,276,000
Appliances and fixtures 46,400
REQUIRED
Trace the effects of these events on the undepreciated capital cost for both assets through to the opening balance on January 1, 2013 assuming no further additions are made to either class of assets.

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Sold appliances Epropriated building CL &fixtures $406,000 $26,000 UCC Januy 2 . . . Proceeds 188,500 362,500 7,250 2,600