On january 1, year 1, eller company purchased an asset that had cost $24,000. the asset had an 8-year useful life and an estimated salvage value of $1,000. eller depreciates its assets on the straight-line basis. on january 1, year 5, the company spent $6,000 to improve the quality of the asset. based on this information, the recognition of depreciation expense in year 5 would
- increase total assets by $4,375.- reduce total equity by $4,375.- reduce total assets by $4,625.- increase total equity by $4,625.

Reduce total equity by $4,375

Explanation:

Basic Depreciation calculated, that is straight line depreciation =

Provided Cost = $24,000

Salvage value = $1,000

Estimated life = 8 years

Therefore, depreciation = $23,000/8 = $2,875 for each year.

Depreciation for 4 years = $2,875 4 = $11,500

Carrying value of asset = $24,000 - $11,500 = $12,500

Add: Expenses incurred in the beginning of year 5 = $6,000

Carrying value = $18,500

Salvage = $1,000

Expected life = 4 years

Depreciation = ($18,500 - $1,000)/4 = $4,375

With this amount the revenues will decrease accordingly stock holders equity will also decrease.

Further the balance of assets will also reduce with the same.

the clients (funders) and customers (individual nonprofit staff) are great to work with. that i can be open about being a person of faith when appropriate. the variety of my tasks each day.

reducing the scale of the market for a new product.