The balance sheet of Woolf's Department Store shows a building with an original cost of \(\$ 800,000\) and accumulated depreciation of \(\$ 660,000\). The building is being depreciated on a straight-line basis over 40 years. The remaining depreciable life of the building is 7 years. On January 2 of the current year, an expenditure of \(\$ 28,000\) was made on the streetlevel displays of the store. Indicate the accounting for the current year if the expenditure of \(\$ 28,000\) was made under each of the following circumstances. Each of these cases is to be considered independently of the others, except where noted. Ignore income tax effects.

a Management decided that improved displays would make the store's merchandise seem sufficiently more attractive that the displays are a worthwhile investment b A violent hailstorm on New Year's Day had destroyed the display windows previously installed. There was no insurance coverage for this sort of destruction. New windows are installed that are physically identical to the old windows. The old windows had a book value of \(\$ 28,000\) at the time of the storm.

c Vandals had destroyed the lisplay windows on New Year's Day. There was no insurance coverage for this sort of destruction. New windows are installed that are physically identical to the old windows. The old windows had a book value of \(\$ 28,000\) at the time of the destruction.

d The old displays contained windows that were constructed of nonshatterproof glass. Management had previously considered replacing its old nonshatterproof windows with new ones, but had decided that there was no benefit to the firm in doing so. New shatterproof windows are installed because a new law was passed requiring that all stores must have shatterproof windows on the street level. The alternative to installing the new windows was to shut down the store.

e Management had previously considered replacing its old, nonshatterproof windows with new ones, but decided that the new windows would produce future benefits of only \(\$ 7,000\) and so were not a worthwhile investment. However, a new law (see part

d) now requires them to do so and the new windows are installed.