On January 1, 2012 Eastwood Company Purchased an Asset That

Multiple Choice

On January 1, 2012 Eastwood Company purchased an asset that had cost $48,000. The asset had a 8-year useful life and an estimated salvage value of $2,000. Eastwood depreciates its assets on the straight-line basis. On January 1, 2016 the company spent $12,000 to improve the quality of the asset. Based on this information, the recognition of depreciation expense in 2016 would

A) increase total assets by $8,750.
B) reduce total equity by $8,750.
C) reduce total assets by $9,250.
D) increase total equity by $9,250.