Salem Company Hired Kirk Construction to Construct an Office Building

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, 2011 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 is the net amount reported for the building on Salem Company's December 31, 2011 statement of financial position?

A) ₤7,665,000
B) ₤7,573,750
C) ₤6,483,750
D) ₤7,800,000