GENERAL MANUFACTURERS INC. purchased and installed a large piece of equipment at the beginning of 2021 and capitalized a cost of $3,174,000. This initial capital cost in Generals books included the following expenditures:

Purchase price	$	2,820,000
Freight charges		27,000
Installation charges		17,000
Annual maintenance contract		310,000
Total	$	3,174,000

GENERAL estimated a five-year useful life for the equipment and used sum-of-the-years digits depreciation. Because of the nature of the equipment, it has no residual value. The sum-of-the-years digits method was used by the company to determine depreciation expense for all equipment for 2019 and 2020. In mid-2021, after the 2020 financial statements were issued, the company decided to switch to the units of production method of depreciation for all equipment, including the newly acquired equipment. At that time, the companys controller discovered that the original cost of the equipment incorrectly included a five-year prepaid annual maintenance contract for the equipment. Additionally, the purchase price ($2,820,000) included freight and insurance charges as the machine was shipped FOB destination and those costs totaling $53,000 were paid for by the vendor. Required:

Use the Accounting Standards Codification system to search for an answer to each question listed below. No computations or journal entries are needed in answering these questions. Type your concise answers in the space provided and upload your completed document (MS Word) in the assignment area in Brightspace.

Citation format ASC AAA-BB-CC-DD

AAA = Topic BB = Subtopic CC = Section DD = Paragraph

Citation example ASC 210 (Topic 210, "Balance Sheet") ASC 210-20 (Subtopic 20, "Offsetting," of Topic 210) ASC 210-20-60 (Section 60, "Relationships," of Subtopic 210-20)

ASC 210-20-60-5 (Paragraph 60-5 of Section 210-20-60)

Question Your Answer	What is an appropriate ASC reference for your answer?
Should the freight charges associated with Generals equipment purchase be capitalized or expensed? Note that the equipment was shipped FOB destination. Use the space below to answer your question. Make sure to list the ASC reference(s) for your answer in the ASC reference column.
	PLEASE NOTE FORMAT AAA-BB-CC-DD ASC___________
Should the charge for the annual maintenance contract be capitalized or expensed? Make sure to list the ASC reference(s) for your answer in the ASC reference column.
	ASC _________________
How should General account for the change in depreciation method? Retrospectively or Prospectively? Make sure to list the ASC reference(s) for your answer in the ASC reference column.
	ASC _________________