Problem 6-2 a 10 points On January 1, 2017, Chicago Company overhauled four turbine engines that generate power for customers. The overhaul resulted in a slight increase in the capacity of the engines to produce power. Such overhauls occur regularly at three-year intervals and have been treated as maintenance expense in the past b Management is considering whether to capitalize this year's $162,500 cash cost in the engine asset account (categorized as fixed assets on the Balance Sheet) or to expense again as a maintenance expense. Assume that the engines have a remaining useful life of three years and no expected salvage value. Also assume straight-line depreciation. REQUIRED Determine the amount of expense Chicago would recognize in 2017, 2018 & 2019 if the cost were recognized as maintenance expense, not capital. Determine the effect of the overhaul on cash flow from operating activities for 2017, 2018 and 2019 if the cost were recognized as maintenance expense, not capital.

On January 1, 2017, Chicago Company overhauled four turbine engines that generate power for customers. The overhaul resulted in a slight increase in the capacity of the engines to produce power. Such overhauls occur regularly at three-year intervals and have been treated as maintenance expense in the past Management is considering whether to capitalize this year's in the engine asset account (categorized as fixed assets on the Balance Sheet) or to $162,500 cash cost Assume that the engines have a remaining useful life of three years and noext) or to expense again as a maintenance expense. Also assume straight-line depreciation. REQUIRED Determine the amount of expense Chicago would recognize in 2017, 2018 \& 2019 if the cost were recognized as maintenance expense, not capital. Determine the effect of the overhaul on cash flow from operating activities for 2017, 2018 and 2019 if the cost were recognized as maintenance expense, not capital