On 15 January 2020, Shibu Ltd purchased second-hand equipment for $94.270 (GST Inclusive) in cash to manufacture a new product for sale overseas. On the same day Shibu Ltd installed the equipment and paid an installation cost of $2,310 (GST Inclusive). The estimated useful life of the equipment is 6 years, with a residual value of $5,100. According to the technical consultant, the equipment is expected to have a running life of 250,000 hours. To maintain the same level of economic benefits from the equipment, Shibu Ltd pays $2,200 (GST Inclusive) each year for maintenance costs. Required: a) Prepare the required journal entries for 5 marks The initial purchase on 15 January 2020 (include the calculation for initial cost of the equipment). The annual maintenance cost of $2,200 b) Calculate the depreciation expense for the year ending 30 June 2022, using the following methods: 1. Diminishing balance method 4 marks 2. Units of production, assuming the equipment was used for 57,500 hours for the year ending 30 June 2022. 3 marks Part 2 At 30 June 2019, the financial statements of McMaster Ltd showed a building with a cost (GST Inclusive) of $310,200 and accumulated depreciation of $152,000. The business uses the straight-line method to depreciate the building. When acquired, the building's useful life was estimated at 30 years and its residual value at $42,000. On 1 January 2020. McMaster Ltd made structural improvements to the building costing $96,800 (GST Inclusive). Although the capacity of the building was unchanged, it is estimated that the improvements will extend the useful life of the building to 40 years, rather than the 30 years originally estimated N 10 change is expected in the residual value Required: a) Calculate the number of years the building had been depreciated to 30 June 2019. b) Prepare the required journal entries to record the cost of the structural improvements on 1 January 2020 4 marks 7 marks 7090