Salem Company Hired Kirk Construction to Construct an Office Building

question 55

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, 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 is the net amount reported for the building on Salem Company's December 31, 2021 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:

Other

In research or discussion, refers to additional items or subjects not specifically listed or categories that do not fit the main classification.

Mediator's Power

The influence and authority a mediator has to facilitate negotiation and conflict resolution between disputing parties effectively.

Arbitration

A form of alternative dispute resolution where an impartial third party, known as an arbitrator, makes a decision to resolve a dispute.

Mediation

A process of conflict resolution where a neutral third party assists the disputing parties to reach a mutually acceptable agreement or understanding.