3 (25 marks) (A) Phonify Company is a phone case production company. On 1 January 2020, the company purchased a machinery at a purchase price of $100,000. Additional information: (a) Sales tax paid on the purchase price was 5%. (b) The company paid $8,000 for installation and $700 for testing of the machinery. (c) Income tax paid on income earned from the sale of phone cases manufactured by the machinery was $9,300. (d) Ordinary repairs to keep the machinery in good working order was $7,500 on 13 August 2020. Required: Determine the cost of machinery as at 31 December 2020. (5 marks) (B) On 1 January 2021, Lily Company purchased a freehold land at a cost of $3,000,000 and completed a major enhancement, lighting and driveway, to make the land more usable at a cost of $600,000. Estimated useful life was five years with no residual value. A new machinery at a cost of $80,000 was purchased on 1 July 2021. Estimated useful life was five years with an estimated residual value of $4,000. The year-end of Lily Company is 31 December. Required: (a) Assume Lily Company uses the straight-line method, compute the depreciation expense for the year ended 31 December 2021 for the following assets. (i) Freehold land; (ii) Land improvement; and (iii) Machinery. (6 marks) (b) Compute the carrying amount of the total non-current assets in (a) on 31 December 2021. (4 marks)