Problem 2 (6.5 marks) On January 1, 2021, LMT Inc. acquired a piece of land to construct a new office building. You have the following information about this transaction: Price of land Tax on purchase of land Legal fees to transfer property of land to LMT Cost of demolishing old building on land Income from sale of windows of old building demolished Cost of new office building foundation Cost of office building construction Cost of insurance during construction $180,000 5% of price $4,500 5,600 500 23,400 460,000 2,000 1,000 Cost of annual insurance on office building after the construction is finished 6,000 Cost to repair a piece of equipment used in the office building's construction LMT management decided to allocate the following amounts to the parts of the office building, and estimated the corresponding useful lives and residual values as follows: Windows Allocated cost $50,000 Useful life 10 years Residual value $2,000 Furnace 24.000 10 years 0 Elevators 80,000 20 years 10.000 Building Rest of office 50 years 20,000 building total cost The building was ready for use on October 1, 2021, but LMT started using it on November 30th, 2021. LMT Inc. applies IFRS. Required 1) Calculate the total cost of land and of the office building and prepare the appropriate journal entry assuming everything was paid for in cash. 2) Calculate the total depreciation expense to be recorded on December 31, 2021 assuming the straight-line method is used for all property, plant and equipment.