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On January 1, 2016, Ruiz Company spent $850 on a plant asset to improve its quality. The asset had been purchased on January 1, 2014

On January 1, 2016, Ruiz Company spent $850 on a plant asset to improve its quality. The asset had been purchased on January 1, 2014 for $8,400 and had an estimated salvage value of $1,200 and a useful life of five years. Owens uses the straight-line depreciation method. Which of the following correctly shows the effects of the 2016 expenditure on the financial statements?

Assets = Equity Rev. - Exp. = Net Inc. Cash Flow
Cash + Equip - Ac.Dep = =
A. (850) + 850 - NA = NA NA - NA = NA (850) IA
B. (850) + 850 - NA = NA NA - NA = NA (850) OA
C. (850) + NA - (850) = NA NA - NA = NA (850) IA
D. (850) + NA - NA = (850) NA - 850 = (850) (850) OA

Option A

Option B

Option C

Option D

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