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Q1) Merton Company bought building at cost of $364,000 on January 1, 2006. Merton evaluated that building's life would be 25 years and residual value at end of 25 years would be $14,000.

On January 1, 2007, company made various expenditures related to building. Entire building was painted and floors were refinished at cost of $21,000. Federal agency needed Merton to install additional pollution-control devices in building at cost of $42,000.  With new devices, Merton believed it was possible to extend life of building by additional six years. 

In 2008 Merton altered its corporate strategy dramatically. Company sold building on April 1, 2008, for $392,000 in cash and relocated all operations in another state.

What amount of gain or loss did Merton record when it sold building? What amount of gain or loss would have been reported if pollution-control equipment had been expensed in 2009?

Accounting Basics, Accounting

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