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Pathology Laboratories Ltd (PLL) purchased its building on 1 July 2010 for $700,000. As PLL develop and make medical products, the building needed a number of modi?cations and specialised ?ttings to be added prior to be able to use the building. These modi?cations and specialised ?ttings cost $500,000. Architect and survey plans cost $50,000 and a loan was negotiated to complete the project for $1,300,000. It was estimated that PLL would be able to use the building for 20 years before the building would be out of date and unusable. The decision to either sell the building or refurbish the building would be made in 19 years. It was decided to depreciate the building costs over 20 years applying an expected possible resale value of $800,000.
Problem 1: What is the cost price of the Building and briefly justify your cost price.
Problem 2: What is the depreciation journal for the year ended 30 June 2011
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