Please answer in detail and also make sure the answer is complete. Wildhorse pai
ID: 2586791 • Letter: P
Question
Please answer in detail and also make sure the answer is complete.
Wildhorse paid $46,700 to replace part of the factory floor. The floor had been capitalized as part of the factory building when it was purchased ten years previously, and was not considered a separate component. When purchased, the building had been assumed to have a 30-year useful life, and was being depreciated on a straight-line basis. At the time of the floor replacement, the building had been depreciated for 10 years. Wildhorse estimated that the original cost of the floor would have been 22% cheaper than the new replacement, due to inflation. Prepare the journal entries to record these transactions, assuming Wildhorse follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not Indent manually, If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit (To record new factory floor.) To record the entry for the old floor.)Explanation / Answer
Dr ($) Cr ($) Factory Building A/c Dr 46700 To Bank A/c 46700 (Being Floor Replaced and the Cost Incurred has been Capitalised to Factory Building A/c) Loss on Sale of Assets Dr 24284 Accumulated Depreciation A/c (36426/30*10) Dr 12142 To Factory Building A/c 36426 Original Cost of Floor was 22 % Cheaper than Current Repairs of Floor, Working Notes Assume Original Cost Replacement Cost 78 100 ? 46700 Original Cost Would be 36426