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Salem Company Hired Kirk Construction to Construct an Office Building

question 58

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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, 2021, and 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, 2021?


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