Highstreet Inc is a distributor of electronic equipment In

January #2124
Highstreet Inc. is a distributor of electronic equipment. In January 2014, the company
purchased a new building for its warehousing and head office requirements for a total cost of S5
million. It is now August 27, 2014, and the company has just completed renovations costing an
additional $2 million and will be moving in on August 31. During these eight months, the
company was able to rent out a portion of the building to a company next door for storage. Net
storage revenue of $100,000 was earned during this renovation period. The elevator has just
been inspected for a total cost of $150,000 and the next inspection will occur in five years as
required. Based on a property inspection that was completed prior to the purchase, the
inspector reported that the roof would likely last another 7 years, and the heating and air
conditioning system would likely have to be replaced in 10 years. The company has determined
that the roof is worth about 10% of the total original cost of the building and the heating and air
conditioning system is worth about 15%. The company expects the building's useful life will be
30 years.Instructions(a) Assuming Highstreet follows ASPE, discuss how the costs of the
building should be initially recorded. Also discuss how any additional subsequent costs should
be recorded and the related depreciation costs.(b) Assuming Highstreet follows IFRS, discuss
how the costs of the building should be initially recorded. Also discuss how any additional
subsequent costs should be recorded and the related depreciation.View Solution:
Highstreet Inc is a distributor of electronic equipment In January

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