At the end of the annual accounting period, December 31, 2014, O’Connor Company’s records reflected the following for Machine A:
Cost when acquired ..... $30,000
Accumulated depreciation .. 10,200

During January 2015, the machine was renovated at a cost of $15,500. As a result, the estimated life increased from five years to eight years, and the residual value increased from $4,500 to $6,500. The company uses straight-line depreciation.

Required:
1. Give the journal entry to record the renovation.
2. How old was the machine at the end of 2014?
3. Give the adjusting entry at the end of 2015 to record straight-line depreciation for the year.
4. Explain the rationale for your entries in requirements 1 and 3.