Hey, I\'m trying to solve the following question: \"Distinguishing repairs versu
ID: 2369538 • Letter: H
Question
Hey, I'm trying to solve the following question:
"Distinguishing repairs versus betterments. Disney World experienced damage from a tornado at Space Mountain, one of its most popular attractions. It paid $30,200 to replace steel reinforcements to the structure damaged by the tornado, $86,100 for a new roof torn off by the tornado, $26,900 for a new air conditioning system that was housed on the roof, and $12,600 to replace carpeting damaged by water. Disney World estimates that higher quality steel used as replacements added 20% more structural support in terms of weight-bearing capacity. The new air conditioning system provides 25% more cooling power than the unit previously installed in the attraction. Compute the amount of these expenses that Disney World should treat as a repair and the amount it should treat as a betterment."
I assumed that the betterments equaled $30,200*.2+$26,900*.25=$12765 and repair would equal the total costs minus the betterment costs, $143,035. I also just tried assuming just the improvement to the A/C system was considered a betterment. However, these answers are all wrong. Thanks for any help!
Explanation / Answer
I recommend you to check the Chapter Long-Term Asset, because if Disney makes an improvement to their roof, it is call as building improvement and you add that improvement to the actual cost of the roof, something like
Land 30,0000 30%(30000/10000)
Building 60,000 60%(60000/100000)
Bulding Improvements 10,000 10% (10000/100000
total total
100,000 100%