Question

On January 1, 2016, Walid Company purchases equipment for $12,000 with 4 years estimated useful life and no salvage value. On January 1, 2019, Walid Company retires the equipment. The straight-line method of depreciation is applied and financial statements are prepared yearly. The retirement entry is: * On January 1, 2018, Zak Company purchases equipment for $24,000, with an estimated useful life of 4 years and no salvage value. The straight-line depreciation method is applied and financial statements are prepared yearly. On January 1, 2020, the company reassesses the condition of the truck and finds that it can extend its useful life by 2 more years. What is the amount of the revised annual depreciation? * 12,000 Accumulated Depreciation Equipment Accumulated Depreciation Gain on Disposal Equipment 10,000 2,000 12,000 12,000 O $3,000 O $6,000 O Option 3 0 Option 2 O $8,000 O $12,000 Accumulated Depreciation Loss on Disposal Equipment 9,000 3,000 3,000 Depreciation Expense Accumulated Depreciation 3,000 12,000 O Option 1 O Option 4