The construction industry is undergoing rapid development following Covid-19 and the year 2020. The company BigBuild Inc. had a new factory built to be able to manufacture special building elements. The factory was ready for use on 1.1.2021. A total of DKK 7,200,000 has been invested in the property, of which DKK 2,400,000 is the value of the site (land), while DKK 580,000 has been paid for the technical installations. The DKK 7,200,00 does not include machines etc. mentioned below. Page 5 out of 5 Production will be carried out on new machines that have been purchased and delivered at the end of 2020. The purchase price for the machines is DKK 2,600,000. The installation of the new machines cost DKK 170,000, in addition to other costs to make the machines ready for use of DKK 30,000. Specific machinerelated training of the workers amounted to DKK 120,000 in 2020. After the machines were ready for use, costs of DKK 25,000 were additionally incurred at the beginning of 2021 for necessary maintenance of the factory workers' training in the use of the machines. Future annual maintenance costs must be expected for employee training of DKK 25,000 and for the machines at DKK 35,000. BigBuild Inc. has as Property, Plant and Equipment "Land and buildings" and "Machinery and technical installations". Buildings have a technical service life of 30 years, but an estimated useful life of 20 years, while installations and production machines have a technical service life of 15 years, but an estimated useful life of 8 years. The company uses straight-line depreciation and the residual value is estimated at DKK 500,000 for the building and another DKK 500,000 for the machines. There is only a negligible residual value on the technical installations. Tax and VAT are disregarded in the assignment.

Question 2.1 Briefly explain (enter key points) how tangible assets are treated in financial accounting. I.e., how are the income statement and the balance sheets affected?