On January 2 2002 Equipment with a Cost of $640000

Multiple Choice

On January 2 2002 equipment with a cost of $640000 was purchased in exchange for a note.The equipment has an estimated salvage value of $60000 and an estimated life of 12000 hours.It is to be depreciated by the units-of-activity method.Use the following tabular analysis to determine the adjustment that would be made for depreciation for the first full year if the equipment was used 3000 hours.

A) Increase Accumulated Depreciation and decrease Depreciation Expense by $160000.
B) Decrease Equipment and Notes Payable by $160000.
C) Decrease Equipment and increase Depreciation Expense by $145000.
D) Increase Accumulated Depreciation and Depreciation Expense by $145000.