Tekala Bhd was incorporated several years ago and it is involved in manufacturing activities.On 1 January 2010, Tekala Bhd acquired a piece of freehold land and a factory building at an amount of RM3,000,000. The cost of the land was RM1,000,000. The useful life of the factory building is 50 years. On 1 January 2013, renovation was carried out on the factory building. The cost of the renovation was RM470,000. It is expected to increase the production capacity of Tekala Bhds operation.However, on 1 July 2014 an explosion occurred in the factory building due to some technical problem. Part of the north wing of the factory building was damaged in the explosion. The management has been informed that the fair value of the factory building as at 1 July 2014 was RM2,130,000.

Required:

1. Explain the depreciation method to be used for the factory building.
2. Determine the carrying amount of the land and the factory building as at 31 December 2012. Assuming the entity adopts the cost model for its subsequent measurement.
3. Advise the effect on the incurrence of the renovation costs.
4. Discuss on the subsequent measurement of the factory building as at 1 July 2014.