Equipment was purchased by Noland Manufacturing on January 1 2022 for $125000.Noland's policy is to adjust its accounts at year-end.Which is the appropriate adjustment to record depreciation at year-end if the company expects to use equipment consistently for five years?

Question

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Option A is the appropriate adjustment to record depreciation at year-end if the company expects to use equipment consistently for five years. The company should increase the depreciation expense by $25,000 and increase accumulated depreciation - equipment by $25,000. This adjustment will reflect the reduction in the value of the equipment over time, as it is used for production purposes. Option B is incorrect because the company should not decrease the accumulated depreciation or the depreciation expense. Option C is incorrect because the equipment value will not increase as it ages, so the company cannot increase the equipment cost account. Option D is incorrect because the company should not decrease the accumulated depreciation or the equipment cost account.

Equipment Was Purchased by Noland Manufacturing on January 1 2022 $25,000 \$ 25,000 $25,000

Equipment Was Purchased by Noland Manufacturing on January 1 2022 $\$ 25,000$