On January 1, 2008 Jose Company purchased a building for $200,000 and a delivery truck for $20,000. The following expenders have been incurred during 2010:
- %u2022 The building was painted at a cost of $5,000
- %u2022 To prevent leaking, new window were installed in the building at a cost of $10,000
- %u2022 To improve production, a new conveyor system was installed at a cost $40,000.
- %u2022 The delivery truck was repainted with a new company logo at a cost of $1,000
- %u2022 To allow better handling of large loads, a hydraulic lift system was installed on the truck at a cost of $5,000
- %u2022 The trucks engine was overhauled at a cost of $4,000
1. Determine which of those costs should be capitalized. Also identify and analyze the effect of the capitalization costs. Assume that all costs were incurred on January 1, 2010
2. Determine the amount of depreciation for the year 2010. The company uses the straight-line method and depreciated the building over 25 years and the truck over 6 years. Assume zero residual value for all assets.
3. How would the assets appear on the balance sheet of December 31, 2010?