Reference no: EM131792918

Question - Capital Expenditures, Depreciation, and Disposal

 Merton Company purchased a building on January 1, 2007, at a cost of $ 364,000. Merton esti-mated that the building's life would be 25 years and the residual value at the end of 25 years would be $ 14,000. On January 1, 2008, the company made several expenditures related to the building. The entire building was painted and floors were refinished at a cost of $ 21,000. A federal agency required Merton to install additional pollution control devices in the building at a cost of $ 42,000. With the new devices, Merton believed it was possible to extend the life of the building by an additional six years.

In 2009, Merton altered its corporate strategy dramatically. The company sold the building on April 1, 2009, for $ 392,000 in cash and relocated all operations to another state.

Please answer the following question - Determine the amount of depreciation that should be reflected on the income statement for 2007 and 2008.