Salem Company Hired Kirk Construction to Construct an Office Building

question 89

Multiple Choice

Salem Company hired Kirk Construction to construct an office building for ₤8,000,000 on land costing ₤2,000,000, which Salem Company owned. The building was complete and ready to be used on January 1, 2017 and it has a useful life of 40 years. The price of the building included land improvements costing ₤600,000 and equipment costing ₤750,000. The useful lives of the land improvements and the equipment are 10 years and 5 years, respectively. Salem Company uses component depreciation, and the company uses straight-line depreciation for other similar assets. What total amount of depreciation expense would Salem Company report on its income statement for the year ended December 31, 2017?

• A)₤335,000
• B)₤200,000
• C)₤426,250
• D)₤376,250

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Definitions:

Human Mortality

The state of being subject to death; the recognition of this condition affects individual and societal behavior and beliefs.

Phallic Stage

A phase in Freudian psychosexual development, typically occurring from ages 3 to 6 years, where the child's libido centers upon their genitalia.

Electra Complex

A psychoanalytic theory suggesting a girl's psychosexual competition with her mother for possession of her father, considered parallel to the Oedipus complex in boys.

Oedipus Complex

The unconscious desire of young boys to replace their fathers and win their mothers’ exclusive love.