Conceptual Framework: Comment on the appropriateness of the journal entries conducted by Wang, Inc. Depreciation expense on the building for the year was x60,000. Because the building was increasing in value during the year, the controller decided to charge the depreciation expense to retained earnings instead of to net income. The following entry is recorded. 1- etained Earnings 60,000 on Buildings 2- Materials were purchased on January 1, 2011, for 120,000 and this amount was entered in the Materials account. On December 31, 2011, the materials would have cost 141,000, so the following entry is made. nventory 21,000 Gain on Inventories During the year, the company purchased equipment through the issuance of ordinary shares. The stock had a par value of 135,000 and a fair market value of $450,000. The fair market value of the equipment was not easily determinable. The company recorded this transaction as follows. 3- uipment 135,000 35 During the year, the company sold certain equipment for 285,000, recognizing a gain of x69,000. Because the controller believed that new equipment would be needed in the near future, she decided to defer the gain and amortize it over the life of any new equipment purchased. 4- 5- Anorder for 61,500 has been received from a customer for products on hand. This order was shipped on January 9, 2012. The company made the following entry in 2011. unts Receivable 61,500 ales 61