NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs costs are charged to expense as incurred... Assume that Commonwealth Delivery made extensive repairs on an existing building and added a new wing. The building sa garage and repair facility for delivery trucks that serve the Denver area. The existing building originally cost $714,000, and by the end of last year, it was half depreciated based on use of the straight-line method, a 14-year estimated useful life and no residual value. During the current year, the following expenditures related to the building were made: a. Ordinary repairs and maintenance expenditures for the year, $15,000 cash. p. Extensive and major repairs to the roof of the building, $141,000 cash. These repairs were completed at the end of the current year. C. The new wing was completed on December 31 of the current year at a cash cost of $236,000.
NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROPERTY AND EQUIPMENT. Expenditures for major additions, improvements and flight equipment modifications are capitalized when such costs are determined to extend the useful life of the asset or are part of the cost of acquiring the asset. Expenditures for equipment overhaul costs of engines or airframes prior to their operational use are capitalized as part of the cost of such assets as they are costs required to ready the asset for its intended use. Maintenance and repairs costs are charged to expense as incurred... Assume that Commonwealth Delivery made extensive repairs on an existing building and added a new wing. The building sa garage and repair facility for delivery trucks that serve the Denver area. The existing building originally cost $714,000, and by the end of last year, it was half depreciated based on use of the straight-line method, a 14-year estimated useful life and no residual value. During the current year, the following expenditures related to the building were made: a. Ordinary repairs and maintenance expenditures for the year, $15,000 cash. p. Extensive and major repairs to the roof of the building, $141,000 cash. These repairs were completed at the end of the current year. C. The new wing was completed on December 31 of the current year at a cash cost of $236,000.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 19E
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