CAL Limited was attracted to the Town of Morning by the towns municipal industry commission. Morning donated a plant site to CAL, and the provincial government provided $144,000 toward the cost of the new manufacturing facility. The total cost of plant construction came to $423,000, and it was ready for use in early October 2017. CAL expects the plant to have a useful life of 15 years before it becomes obsolete and is demolished. The company uses the straight-line method of depreciation for buildings and is required to include the plant in Class 6 (10% rate) for tax purposes.

The entries that are required in 2017 to record the payment to the contractor for the building and the receipt of the provincial government assistance. Assume that the company treats the assistance as a reduction of the assets cost

Prepare the entries that are required in 2017 to record the payment to the contractor for the building and the receipt of the provincial government assistance. Assume that the company treats the government assistance as a deferred credit. Also prepare any adjusting entries that are needed at the company's year ends, December 31, 2017 and 2018.

No. Account Titles and Explanation Debit Credit 1. Buildings 423000 Cash 423000 (To record the cost of building) 2. Cash 144000 Buildings 144000 (To record the amount received from the government) 3. Depreciation Expense 4650 Accumulated Depreciation - Buildings 4650 (To record depreciation expense for 2017) 4. Depreciation Expense 18600 Accumulated Depreciation Buildings 18600 To record depreciation expense for 2018)