Salem Company Hired Kirk Construction to Construct an Office Building

Multiple Choice

Salem Company hired Kirk Construction to construct an office building for £6400000 on land costing £1600000 which Salem Company owned. The building was complete and ready to be used on January 1 2017 and it has a useful life of 40 years. The price of the building included land improvements costing £480000 and personal property costing £600000. 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 2017?

A) £268000
B) £160000
C) £341000
D) £241000