Mobic Incacquired Some Manufacturing Equipment in January 2013 for $400,000 and and Depreciated
Multiple Choice
Mobic Inc.acquired some manufacturing equipment in January 2013 for $400,000 and depreciated it $40,000 each year for three years on a straight-line basis.During 2016,the manufacturer announced a new technology for this type of equipment that will make the old models obsolete by the end of 2019.As a result,Mobic will plan to replace the equipment at that time,effectively reducing the asset's life from ten to seven years.In its financial statements for 2016,Mobic should:
A) Charge $280,000 in depreciation expense.
B) Report the book value of the equipment in its12/31/2016 balance sheet at $210,000.
C) Make an adjustment to retained earnings for the error in measuring depreciation during 2013-2015.
D) None of these answer choices is correct.
Correct Answer:
Verified
Correct Answer:
Verified
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