Salem Company Hired Kirk Construction to Construct an Office Building

question 172

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, 2014 and it has a useful life of 40 years. The price of the building included land improvements costing ₤600,000 and personal property costing ₤750,000. 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, 2014?

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

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Definitions:

Nylon 6,6

A type of polyamide made by polymerizing hexamethylene diamine and adipic acid, known for its strong, elastic, and resistant properties, used in textiles and engineering plastics.

Monomers

Simple molecules that can undergo polymerization to form more complex molecules called polymers, serving as the building blocks for a variety of macromolecules.

Statistical Inference

The method of using data from a sample to make estimates or test hypotheses about the characteristics of a larger population.

Confidence Level

A statistical measure that quantifies the level of certainty in a sampling method.