Reference no: EM132513783

Point 1: At 30 June 2019, the financial statements of McMaster Ltd showed a building with a cost (net of GST) of $270,000 and accumulated depreciation of $137,000. The business uses the straight-line method to depreciate the building. When acquired, the building's useful life was estimated at 30 years and its residual value at $54,000. On 1 January 2020, McMaster Ltd made structural improvements to the building costing $85,000 (net of GST). Although the capacity of the building was unchanged, it is estimated that the improvements will extend the useful life of the building to 40 years, rather than the 30 years originally estimated. No change is expected in the residual value.

Question 1: Give the general journal entry to record the cost of the structural improvements on 1 January 2020. (Enter all debit entries first, followed by all credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Where amounts from the part A solution are required, use the rounded amount in your calculations. Round answers to 0 decimal places, e.g. 5,275.)