Nicholson Company Purchased Equipment on January 1, 2013, for $80,000

Multiple Choice

Nicholson Company purchased equipment on January 1, 2013, for $80,000 with an estimated salvage value of $20,000 and estimated useful life of 8 years. On January 1, 2015, Nicholson decided the equipment will last 12 years from the date of purchase. The salvage value is still estimated at $20,000. Using the straight-line method the new annual depreciation will be:

A) $4,500.
B) $5,000.
C) $6,000.
D) $6,667.