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:

Monaural

Pertaining to or affecting one ear, used in contexts related to hearing.

Mon(o)-

A prefix meaning one, single, or alone.

Endaural

Related to, occurring within, or performed through the ear canal.

Audiology

The branch of science and medicine dealing with the study of hearing, balance, and related disorders.