Final answer:
The balance sheet presentation of the building at the end of 2014 after accounting for the cost of capital improvements and annual depreciation will show a carrying value of $976,471.
Step-by-step explanation:
When ABC purchased a building for $1,000,000 with a 10-year useful life and a $200,000 salvage value, the annual depreciation expense calculated using the straight-line method is ($1,000,000 - $200,000) / 10 = $80,000. However, on January 1, 2014, ABC made a capital improvement by replacing doors with handicap-accessible doors for $200,000. The cost of these new doors will be added to the asset's carrying amount and depreciated over the remaining useful life of the building, starting from the date of improvement.
For the year 2014, the annual depreciation will be for one full year for the building and for a partial year for the new doors improvement. The building's prior accumulated depreciation until the end of 2013 is $80,000 per year × 1.5 years = $120,000. Including the improvement, the adjusted carrying amount at the beginning of 2014 is $1,000,000 - $120,000 + $200,000 = $1,080,000. The annual depreciation for the whole of 2014 for the building is still $80,000, and for the doors with a remaining life of 8.5 years (from Jan 2014), it is $200,000 / 8.5 = approximately $23,529.41.
The total depreciation for 2014 is $80,000 (building) + $23,529 (doors) = $103,529 (rounded to the nearest dollar). Thus, the carrying value of the building at the end of 2014 is $1,080,000 - $103,529 = $976,471 (rounded to the nearest dollar) to be presented on the balance sheet.