Answer:
Will capitalize the cost of the modification and will recognize depreciation expense of $3,000.
Explanation:
Provided information, we have the following details.
Original value of asset = $30,000
Accumulated depreciation = $12,000
Therefore carrying value of asset = $30,000 - $12,000 = $18,000
Remaining life of asset = 5 years
When an additional modification is done, cost of modification = $6,000
Revised life of machine due to modification = 8 years
Thus, the modification cost will also be capitalized.
Depreciation each year = ($18,000 + $6,000)/8 = $3,000 each year.
Therefore, correct option is
c. Will capitalize cost of repairs and will charge depreciation of $3,000 each year
