70.2K
Verified Solution
Link Copied!
Thank you in advance! Correct Full Solution required!
On January 2, 20x0, the Lamia purchased a building for $6,000,000. The cost of the building
was allocated as follows:
| Cost | Residual Value | Useful Life |
| External Structure | $4,000,000 | $400,000 | 40 |
| All other components | 2,000,000 | 0 | 15 |
On April 30, 20x12, the HVAC system is replaced at a cost of $600,000. The cost of the original
HVAC system was $800,000 and was included in All Other Components.
On April 30, 20x28, Lamia invested $1,000,000 in improvements to the building (allocated to
the external structure). This improvement increased the total useful life of the external structure
to 60 years. The residual value remains the same.
Lamia uses the straight-line method of depreciation.
Required
a) Prepare the journal entry to record the purchase of the building on January 2, 20x0.
b) Prepare the journal entry to record depreciation expense at December 31, 20x0.
c) Prepare the journal entry on April 30, 20x12.
d) Prepare the journal entry to record depreciation expense at December 31, 20x12.
e) Prepare the journal entry on April 30, 20x28.
f) Prepare the journal entry to record depreciation expense at December 31, 20x28.
Answer & Explanation
Solved by verified expert
