Gonzo Co. owns a building in Georgia. The building’s historical cost is $970,000, and $440,000 of accumulated depreciation has been recorded to date. During 20X1, Gonzo incurred the following expenses related to the building:
Repainted the building $48,000
Major improvement to the plumbing 109,000
Replaced carpet in the plant’s accounting offices 47,600
Added a 7,000-square-foot lobby 234,600
Repaired a broken water main 155,800
- Determine which of the costs incurred by Gonzo Co. should be capitalized and which should be expensed.
- What is the subsequent carrying amount of the building prior to recording 20X1 depreciation expense?