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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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