Question

Ryan Company purchased a building on January 1, 2021, for $268,000. In addition, during 2021 the following costs related to the building have been incurred: Utilities $ 30,000 Property tax 5,800 Expansion of the building 71,000 New air-conditioning system 46,000 General maintenance $ 37,000 The amount of expenditures to capitalize for the year (not including the initial purchase of the building) is:

Answer 1

$117,000

Step-by-step explanation:

Given that,

Utilities = $ 30,000

Property tax = $5,800

Expansion of the building = $71,000

New air-conditioning system = 46,000

General maintenance = $ 37,000

Amount of expenditures to capitalize for the year:

= Expansion of building + New air conditioning system

= $71,000 + $46,000

= $117,000

Note:

Utilities and general maintenance cost are not capital costs. Hence, they are not capitalized.

Any of the taxes or expenses shall not be capitalized, if they have incurred after the acquisition.