A gain or loss on disposal of a plant asset is determined by comparing the
original cost of the asset with the proceeds received from its sale. book value of the asset with the asset’ s original cost. book value of the asset with the proceeds received from its sale. replacement cost of the asset with the asset’ s original cost. 4- IFRS Multiple Choice Question 326
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, 2013 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, 2013 statement of financial position?
£ 7,573,750 £ 6,483,750 £ 7,800,000 £ 7,665,000 5- Multiple Choice Question 77