On January 1, Scion Co

question 6

Multiple Choice

On January 1, Scion Co. purchased land with a usable building on it for $210,000. The appropriate cost of the land and building were $70,000 and $140,000, respectively. Scion erroneously assigned the entire purchase cost of $210,000 to land. Scion should depreciate the building using the straight-line method over 20 years with an expected zero salvage value. As a result of Scion's treatment of the purchase of land and building, its current net income is:

• A)understated by $10,500.
• B)understated by $7,000.
• C)overstated by $7,000.
• D)overstated by $10,500.

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Definitions:

Marasmus

A severe form of malnutrition caused by inadequate intake of protein and calories, characterized by wasting and stunted growth.

SIDS

Sudden Infant Death Syndrome, an unexplained death, usually during sleep, of a seemingly healthy baby less than a year old.

Sleeping Position

The posture or arrangement in which a person positions their body while sleeping, which can affect health and comfort.

Brain Circumference

A measurement around the largest part of the head, often used to assess brain growth and development, especially in infants.