Sunlight Pty Ltd is a business that manufactures and sells solar panels. The business was established in 2014 and has grown to a large proprietary company with four owners: Rachel, Fiona, John, and Kate.

The business operates from a large factory in Melbourne and is registered for Goods and Services Tax (GST) with a 30 June financial year end. When it commenced its operations on 20 March 2014, Sunlight was not able to purchase a building to manufacture solar panels in and instead rented a factory. As the business has grown, the owners are considering purchasing the following assets for $411,400 (GST Inclusive) on 1
July 2022:

Asset	Fair value of Asset
Land	$127,500
Building	$255,000
Equipment	$25,500
Total	$408,000

Purchasing these assets would involve additional costs: legal fees of $4,488 (GST Inclusive) to register the land in business’ name; $5,368 (GST Inclusive) to rewire the building; $4,620 (GST Inclusive) for a one-year building insurance; and $2,310 (GST Inclusive) to conduct a safety inspection of the equipment. In addition, the building will include the following necessary (not optional) fixture and fittings costs to ensure that the site is in a workable condition: $9,680 (GST Inclusive) to install solar panels; $11,440 (GST
Inclusive) to install a surveillance system; and $14,080 (GST Inclusive) to install a cooling/heating system. The building is expected to have a useful life of 20 years and an estimated residual value of $72,000. The equipment is expected to have a useful life of 5 years, be used for 10,000 hours, and carry an estimated residual value of $4,600. The equipment is expected to be used for 1,760 hours in Year 1; 2,140 hours in Year 2; 2,300 hours in Year 3; 2,000 hours in Year 4; and 1,800 hours in Year 5. Sunlight adopts the cost model to measure all existing non-current assets. Because the business has seen a significant increase in the demand for its products due to the pandemic in
recent months, the owners believe existing non-current assets should be valued higher and it would be more appropriate to change to the revaluation model of measuring non-current assets.

Question 2:
Calculate the annual depreciation expense over the life of both the building and equipment using all 3 methods of depreciation (where possible), starting with year 1 ending 30 June 2022. For the building and equipment, select the method of depreciation you would advise the owners to use and justify your selection.