For this transaction, the first thing we're going to do is ignore the stuff
about salvage value and 25 years.
We'll come back to that in a later video.
Instead we're going to focus on the transaction that happened on May 25th,
which is when Park paid the cash.
We paid $33,000 of cash, cash is an asset.
We make an asset go down through a credit.
So we credit Cash for 33,000.
So now we're looking for a debit.
What did we get for this cash?
Well, we added to the building.
And so we're going to debit Building for
$33,000 to increase the balance in the Building account.
Remember, we make assets go up through debits.
>> Excuse me.
Why isn't this an expense, instead of an asset?
All of the expenses seem like assets to me, and the assets seem like expenses.
Bother.
>> Great question.
The general rule is if you spend money on maintenance,
an expected cost of maintaining the asset, then you would expense it.
But if you spend money for a capital improvement,
which would be something that would increase the value of the building or
how how long you plan to use it, then you get to add that to the Building account.
But don't worry about this now.
This is something we're going to talk about in a lot more detail
later in the course.