Question

On January 4 of this year, Diaz Boutique incurs a $140,000 cost to modernize its store. Improvements include new floors, ceilings, wiring, and wall coverings. These improvements are estimated to yield benefits for 8 years. Diaz leases its store and has 5 years remaining on the lease. 1. & 2. Prepare the journal entry to record the cost of modernization and amortization at the end of this current year View transaction list Journal entry worksheet < 1 2 Record the cost of modernization of the store for $140,000 cash. Note: Enter debits before credits Date General Journal Debit Credit Jan 04 Record entry Clear en View general journal

Answer 1

Journal Entries in the books of Diaz Boutique
Sl No	Particulars	Debit Rs.	Credit Rs.
Jan 4th	Building A/c                        Dr	1,40,000.00
	To Bank A/c		1,40,000.00
	(Being Cost incurred to modernize the stores includes flooring, ceilings, wiring and wall covering).
	The incurred has to be amortized over a period of 8 years. Because as per IFRS, Asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.
	The cost incurred has the benefits over 8 years. So the cost incurred has to be amortized over a period of 8 years.
Dec 31st	Amortization of Buildings A/c    Dr	17,500.00
	To Building A/c		17,500.00
	(Being building is amortized over a period of 8 years)
	(Rs.1,40,000/-*1/8)
Dec 31st	Statement of Profit & Loss A/c    Dr	17,500.00
	To Amortization of Building A/c		17,500.00
	(Being Amortization of building expenses charged to Statement of Profit & Loss A/c)