On January 1, 2016 the accounting records of Stiedl Ltd. Included a debit of $15,000,000 in the building account and $12,000,000 in related accumulated depreciation. The building was purchased in January 1976 for $15,000,000 and was estimated to have a 50 year life with no residual value. Stiedl uses straight line depreciation. During 2016 the following costs were incurred:
1. The original roof of the building was removed and replaced with a new roof. The old roof had an estimated cost of $1,000,000 (included in building cost). The new, more energy efficient roof, cost $2,500,000 and is expected to have a 15 year life.
2. The ongoing frequent repairs on the building during the years were $33,000.
3. The buildings old heating system was replaced with a new one. The new HVAC system cost $700,000 and has an estimated life of 7 years with no residual value. The estimated cost of the old HVAC is unknown.
4. A natural gas explosion caused $44,000 in damage to the building. The major repairs did not change the estimated value or life of the building.
Required:
Prepare the required journal entries for the transactions noted above.