Problem:
A company purchased a piece of equipment costing $125,000 and is depreciating it assuming a 10-year life. The residual value was originally expected to be $10,000. At the end of the fifth year, the motor was replaced (a major overhaul) at a cost of $40,000. The overhaul increased the efficiency of the equipment. How much is depreciation expense in the sixth year assuming straight-line depreciation, no change in estimated useful life and no change in residual value?
Group of answer choices
a. 11,500
b. 21,500
c. None of the above.
d. 18,500
e. 19,500