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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.
4IFRS 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