Question
At 30 June 2013, the financial statements of Detroit Ltd showed a building with a cost of $300,000 and accumulated depreciation of $150,000. The business
At 30 June 2013, the financial statements of Detroit Ltd showed a building with a cost of $300,000 and accumulated depreciation of $150,000. The business uses the straight-line method to depreciate the building. When acquired, the buildings useful life was estimated at 50 years with no residual value. On 1 January 2019, Detroit Ltd completed structural improvements to the building costing $93,000 and paid with cash. As a result of the improvements, the useful life of the building was changed to 50 years from the date of the improvements. No change is expected in the residual value. Ignore GST.
Required:
- Calculate the number of years the building had been depreciated to 30 June 2013.
- Prepare the general journal entry to record the cost of the structural improvements on 1 January 2019
- Prepare the general journal entry to record the buildings depreciation expense for the year ended 30 June 2019. Assume no depreciation had been recorded since 30 June 2018.
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