Capital Expendres Depreciation, and Op Herton Company purchased a building on January 1, 2016, at a cost of $304,000. Merton estimated that its Me would be 25 years and its residual value would be $34.000 On January 1 2017, the company made several expenditures related building. The entire building was painted and floors were refinished at a cost of $21,000. A federal agency ton to instal addimal tion tral devices in De building at a cost of $42,000 with the new devic, Merton believed it was possible to extend the life of the building by six years. In 2018, Mertan altered its corporate strategy ramaticaly. The company sold the building on April 1, 2018, for $392,000 in cash and relocated all operations to another stat Required 1. Determine the depreciation that should be on the income statement for 2016 and 2017 2018 2017 14,000 24,37 2. Explain why the cost of the polution contra equipment was not expensed in 2017. a. The at was capitalized because it provided a current year tax advantage. b. Since the pollution control eodonent has an unknown it, the art was capital csce the pollution control equipment extended the life of the asset, the asset was capitalized d. Extending the Wife of the asset makes no difference on whether to expense or capitale, so the company chose to capitalize it for lower taxes in the current year. 3. What amount of gain or did tan record when it did the building? Do not round intermediate calculations What amount of gain or loss would have been reported if the pollution contral equipment had been expersed in 2017 C 1. Recond depreciation by increasing depreciation expense. 2. A capital expenditure is a cost that improves the asset and is added to the asset account. A cost that keeps an asset in its normal operation condition is treated as an expense 3. Determine the pain or if the control elment had been expensed and that determine the value of the building when it is sold. Consider the book value of the building when determining the gain or Capital Expenditures, Depreciation, and Disposal Merton Company purchased a building on January 1, 2016, at a cost of $364,000. Merton estimated that its life would be 25 years and its residual value would be $14,000. On January 1, 2017, the company made several expenditures related to the building. The entire building was painted and floors were refinished at a cost of $21,000. A federal agency required Merton to install additional pollution control devices in the building at a cost of $42,000. With the new devices, Merton believed it was possible to extend the life of the building by six years. In 2018, Merton altered its corporate strategy dramatically. The company sold the building on April 1, 2018, for $392,000 in cash and relocated all operations to another state. Required: