Real Estate
Component Accounting — Roof Replacement
Capitalizing a new roof as a separate asset component and removing the old roof's book value.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Building — Roof Component | Asset (+) | 80,000.00 | - |
| Accumulated Depreciation (Old Roof) | Contra-Asset (-) | 20,000.00 | - |
| Loss on Disposal (Old Roof) | Expense (+) | 10,000.00 | - |
| Building — Roof Component (Old) | Asset (-) | - | 30,000.00 |
| Cash / Bank | Asset (-) | - | 80,000.00 |
💡 Accountant's Note
Under IAS 16 component accounting, each significant part of a building (roof, HVAC, structure) is depreciated separately. When a component is replaced, the old one is derecognized and the new one is capitalized.
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