Salem Company Hired Kirk Construction to Construct an Office Building

question 45

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, 2015 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, 2015 statement of financial position?

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

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Definitions:

Experimental Research

A research methodology that assesses cause-and-effect relationships by manipulating one or more variables while holding others constant to study their effects on certain outcomes.

Reliability

The degree to which an assessment tool produces stable and consistent results over multiple trials.

Validity

The extent to which a concept, conclusion, or measurement is well-founded and likely corresponds accurately to the real world.

Sociological Research

A field of study that involves investigating societies, human behaviors, and social patterns through various methodologies and theories.