On June 30, 2018 Globex ltd. purchased a parcel of land and an accompanying office building for$7000000. Based on an appraisal performed on the date of purchase the land had market value of $6000000, the building had the market value of $4000000.

Before Globex could move into the new office building the following modifications were to be done:

a new HVAC (heat, ventilation, air Conditioning) system was installed for a total price of 120000. this new system is gauranteed to reduce the monthly bill of $10000 by 25%.

the building's foundation was reinforced at a cost of 250000. Management was informed that this reinforcement would extend the building life by at least 3 to 5 years.

As a result of these modifications, globes was unable to move into the office building until 30 September,2018.

After the modifications were made management of globex was of the opinion that building had a useful economic life of 20 years and the savage value of $100000.

due to the ongoing legal problems on may 1, 2020 globes was forced to sell the land and building for 10000000. Based on an appraisal performed on the date of sale $7500000 was allocated to the land and $ 2500000 was allocated to the building.

Globex has a calendar year end and uses the double declining method of amortization.

Q1: Determine the original cost of the building and the land that globes would record in its record on 30 June, 2018.

q2: Determine the amount of amortization expense for 2018 and 2019.

q3: Prepare the journal entry/entries that the globes would have to record in its financial records on may 1 2020