Question: TANGIBLE ASSETS Problem 3 (13 points) Show your work pay attention to dates a. Freeloads Corp. purchased a $350,000 machine on January 1, 2003, with

TANGIBLE ASSETS Problem 3 (13 points)

Show your work pay attention to dates

a. Freeloads Corp. purchased a $350,000 machine on January 1, 2003, with an expected useful life of 20 years and a salvage value of $30,000. Calculate the annual depreciation expense for 2003 under the straight-line method.

b. Continuing from part a: Suppose that on 1/1/2005 Freeloads also spends $25,000 to upgrade the machine frame and correspondingly revises the estimate of residual value to $33,000 and the estimate of total useful life to 27 years. Calculate the straight-line depreciation for 2005.

c. Continuing from part b: Suppose that on 2/1/2006 Freeloads spends $1,000 cash on regular repairs and maintenance of the machine. What journal entry would they record?

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