(1) Prepare journal entries to record the following transactions of a newly setup company during the current year: 1 Jan Purchased an existing factory building with the surrounding land for $25,000,000 cash. Stamp duty was at 10% of the purchase price, estate agent commission was 1% of the purchase price, and $50,000 was spent to perform a title search relating to the estate. An agreement was also signed with a landscaping provider to provide regular maintenance on the estate for the next 2 years, at the cost of $7000 per year to be paid on 31 December of each year. The entire purchase was financed in cash. An appraisal of the land and building at the time of purchase indicated that the market value of the land was $20,000,000 and the market value of the building was $12,000,000. Land has an indefinite useful life whereas the building is expected to have a useful life of 50 years. Residual value for building is estimated to be $1,000,000. The building is to be depreciated using the straight-line method. 1 Jan Purchased an automated production machine from Germany at a purchase price of $700,000, financed through a 10%, three-year note. The machine was purchased on FOB Shipping Point terms. Sea freight was at $10,000 inclusive of insurance. Custom duty was at 1% of the purchase price and land delivery costs $500. A safety licence has to be applied to the authorities in order for the machine to be used. This safety licence requires a $300 registration fee and also requires the machine to be tested for safety before it will be approved. A professional engineer is therefore engaged to conduct a safety test on the machine and to certify on its safety. The cost of this service is $1,000. The machine is estimated to have a useful life of 10 years at a residual value of $200,000. The double-declining balance method is to be used for depreciation on production machines. 1 Mar Purchased a truck for $120,000 with a 10-year useful life and a $10,000 residual value. The Certificate of Entitlement (COE) of $40,000 is required in order to drive the vehicle legally. Also paid 7% sales tax on the purchase price, $500 to paint the truck with the company's logo and name. All payments were in cash. The management has decided to depreciate Trucks using the units of production method. The total mileage estimated to be driven by the Summer 2021 MGA201 Introduction to Financial Accounting Coursework Page 2 truck is 100,000km. For the current year, the total mileage driven by the truck was 15,000km. 31 Dec Record all necessary adjustments on an annual basis. (2) At the beginning of the second year, the residual value of the building was estimated to be worth $2,000,000 with an estimated useful life of 40 years. Based on the new estimates, compute the depreciation of the building. (Round up all your answers to the nearest dollar.)