The Milan Corporation owns a building that it has used for a number of years....
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The Milan Corporation owns a building that it has used for a number of years. At the start of the current year, the building has a cost of $1.5 million and accumulated depreciation of $600,000. Straight line depreciation has been used with no expected residual value. The asset was originally assumed to have a thirty-year life, and twelve years have now passed. Assume that each of the following situations is entirely independent. For each, prepare the appropriate journal entry and determine the amount of depreciation expense that should be reported for the current year. a. The company spends $22,000 in cash to paint the building. When the company bought the building originally, officials had anticipated that it would need to be painted periodically in order to last for thirty years. b. The company spends $80,000 to add a new room at the back of the building. c. The company spends $35,000 to fix a rotten space on the roof which was beginning to leak. Officials had not expected that the roof would rot. d. The company spends $30,000 on a new type of foundation improvement. Officials had not expected to do this but now believe the building will last for an additional five years because of this work.
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