In January 2004, Mr. Pandit decided to buy a residential property and rent to various tenants. On 1st January 2004, he borrowed Rs. 30 Lakhs from a housing bank on a condition of repaying the loan in 10 annual installments with an interest @10% per annum. He put in his own savings of Rs. 15 Lakhs and bought a property having 5 flats in a fast developing locality. The cost of the property was Rs. 30 Lakhs comprising land valued at Rs. 15 lakhs and building values at Rs. 15 lakhs.

The entire year of 2004 was spent in repairing and repainting the property. The cost of one-time repairs was Rs. 5 lakhs and that of repainting, which was completed on 31st December 2004, was Rs. 1.2 lakh. Mr. Pandit expected that this paint would last for 3 years before it was repainted. The life of the property after repairs was expected to be 20 years. Mr. Pandit was informed that cost of repairs and first year's interest on the bank loan had to be added to the cost of building as it were incurred in bringing asset to a position of generating revenue.On December 31st of 2004, Mr. Pandit paid the first installment of loan together with interest @10%.

The flats were ready to let out on 1st January 2005. 5 tenants signed the agreement and paid interest free deposit equivalent to 10 months rent. The monthly rent of each flat was Rs. 8000. The three tenants paid their rent regularly on the last day of the month during 2005. One tenant Mr. Khanna, had indicated that he would vacate the flat on 31st december 2005 and had not paid his rent for November and december, requesting Mr. Pandit to adjust the same against his deposit. Though Mr. Khanna vacated the flat on the decided date, Mr. Pandit had yet to pay his balance deposit amount. Another tenant, Mr. Khan went abroad in December 2005 but had promised to pay the rent on return. Mr. Pandit had already found a tenant for the flat vacated by Mr. Khanna and the new tenant paid a deposit of Rs. 80000 on 31st December 2005. Mr. Pandit paid the second installment of loan together with interest on 31st December 2005. Mr. Pandit had made the following payments during 2005:

Taxes - Rs 20000

Electricity - Rs 10000

Telephone - Rs 10000

Fire Insurance was taken on January 1, 2005 for 4 years - premium Rs 60000

The closing cash/bank balance was Rs. 546000 on 31st December 2005.

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Prepare the income statement and balance sheet of Samavya Building as on 31st December 2005 and show each step in detail.