Bridgadoon Consulting bought a building and the land on which it is located for $175,000 cash. The land is estimated to represent 70 percent of the purchase price. The company paid $15,000 for building renovations before it was ready for use.

Required:

1.The renovation costs should be capitalized.

multiple choice

• True
• False

2.Prepare the journal entry to record all expenditures. Assume that all transactions were for cash and they occurred at the start of the year.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

3.Compute straight-line depreciation on the building at the end of one year, assuming an estimated twelve-year useful life and a $3,900 estimated residual value.

4.What should be the book value of the land and building at the end of year 2?