Answer:
1. The cost to be capitalized to building account is $343,600
2. The subsequent carrying amount of the building is $873,600
Explanation:
1. In order to calculate the which of the costs incurred by Gonzo Co. should be capitalized to the building account we would have to use the following formula:
cost to be capitalize=Major improvement to the plumbing+Added a loby
cost to be capitalize=$109,000+$234,600
cost to be capitalize=$343,600
The cost to be capitalized to building account is $343,600
2. To calculate the subsequent carrying amount of the building we have to use the following formula:
subsequent carrying amount=Historical cost+improvements-Accumulated Depreciation
subsequent carrying amount=$970,000+$343,600-$440,000
subsequent carrying amount=$873,600
The subsequent carrying amount of the building is $873,600
