Fernbank Farms ​

Fernbank Farms
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This company purchased a semi truck at the beginning of 2019 at a cost of $100,000. The truck had an estimated life of 5 years, an estimated residual value of $20,000, and will be depreciated using the straight-line method. On January 1, 2021, the company made major repairs of $30,000 to the truck that extended the life 3 years. Thus, starting with 2021, the truck has a remaining life of 5 years and a new salvage value of $8,000.
-Refer to Fernbank Farms. When calculating depreciation for 2021, the company's accountant should

A) add the $30,000 to the book value at December 31, 2020, and then allocate the revised depreciation basis over the remaining adjusted useful life of 5 years.
B) report the effect of the change in life as an expense on the income statement in 2019.
C) ignore the change in life on the original cost of $100,000 and depreciate the additional $30,000 cost separately over its useful life.
D) expense the $30,000 and depreciate the original cost of $100,000 over its revised estimated total live of 7 years.