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
Required:
1. Which of the costs incurred by Gonzo Co. should be capitalized to the building account?
2. What is the subsequent carrying amount of the building prior to recording 20X1 depreciation expense?
