Salem Company Hired Kirk Construction to Construct an Office Building

question 294

Multiple Choice

Salem Company hired Kirk Construction to construct an office building for £6,400,000 on land costing £1,600,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2018 and it has a useful life of 40 years. The price of the building included land improvements costing £480,000 and personal property costing £600,000. The useful lives of the land improvements and the personal property are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What is the net amount reported for the building on Salem Company's December 31, 2018 statement of financial position?

• A) £6,132,000
• B) £6,059,000
• C) £5,187,000
• D) £6,240,000
• IFRS:

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