Salem Company Hired Kirk Construction to Construct an Office Building

question 129

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 total amount of depreciation expense would Salem Company report on its income statement for the year ended December 31, 2018?

• A) £268,000
• B) £160,000
• C) £341,000
• D) £301,000
• IFRS:

Recognize the sources of new scientific knowledge and their contributions to technological advancements.

Comprehend the decision-making process behind R&D investments and the challenges involved.

Understand the fundamental principles of optimizing R&D spending in firms.

Comprehend the role of the expected-rate-of-return and cost-of-funds curves in R&D decision-making.

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Definitions:

Experimentation

involves conducting controlled tests or trials to discover, validate, or test hypotheses, theories, or products.

Decrease Accountability

Reducing the extent to which individuals or teams are held responsible for their actions, decisions, or performance.

Quality Evaluation

The process of assessing the quality of products, services, processes, or performance through set criteria and standards.

Partner Proficiency

The level of skill and competence a partner or team member possesses in contributing towards collective goals or tasks.