As the business has grown they would now like to purchase their own land and buildings to operate the business in. They are currently looking at 2 options.

Option 1 would involve additional costs relating to legal fees of $2,200 (GST Inclusive) to register the business as the owners of the land, $1,300 (GST Inclusive) to conduct a safety inspection of the machinery, $5,500 (GST Inclusive) to rewire the building as the existing al cables no longer work, $4,400 (GST Inclusive) for one year building insurance. Option 1 would involve purchasing the following assets for $400,000 (GST Exclusive) on 1 July 2020.

Option 1	Fair Value of asset
Land (is not depreciation) Because land dont have depriciation	100,000
Building 4400 (GST inclusive) $5,500 (GST Inclusive)	350,000
Machinery 1300 (GST inclusive)	30,000
Total	480,000

Option 2 would involve continuing to rent a factory but at larger premises. The owners have recently located a suitable place and negotiated a possible contract at a cost of $120,000 (GST Exclusive) per year for five years.

The building is expected to have a useful life of twenty years and an estimated residual value of $15, 666.67. The machinery is expected to have a useful life of 5 years and be used for 10,000 hours and an estimated residual value of $800. The machine is expected to be used 1,500 hours in first year, 2,200 hours in year 2, 2,500 in year 3, 2,000 in year 4 and 1,800 in year 5.

The machinery have 5 years useful life, residual value 800, using 10000 hours

The machine is expected to be used 1,500 hours in first year, 2,200 hours in year 2, 2,500 in year 3, 2,000 in year 4 and 1,800 in year 5.

Calculate the annual depreciation expense over the life of both the building and machinery

using all 3 methods of depreciation (where you can), starting wi

th year 1 ending 30 June 2021.

For the building and machinery select the method of depreciation you would advise them to

use and justify your selection. Please use excel to do this. A template was provided in Topic 4.

Please take a screen shot of your tem

plates that show the answers and insert directly under

question 2 answer. Please include in the appendix a screen shot of your template that shows

the excel formulas that you used. Please use formulas to obtain the answ