Problem - At the beginning of the year, the Kelvin Company owned equipment that appeared on its balance sheet as such:
Equipment - $7,000,000
Accumulated Depreciation - ($2,000,000)
The equipment was purchased two years ago and assigned a useful life of six years and a salvage value of $1,000,000. During the first month of the year, Kelvin made modifications to the equipment that increased its remaining useful life from four years to five years. Its salvage value remained unchanged. The cost of these modifications was $50,000. What would be the balance in the accumulated depreciation account of this equipment on 12/31 of that year?
a. $2,760,000
b. $3,000,000
c. $810,000
d. $2,000,000