SolarWave Technologies had the following transactions during the year ending December 31, 20X1:

• On January 1, purchased machinery for $800,000, with an estimated residual value of $80,000 and a useful life of 8 years.
• On March 1, upgraded the machinery with additional parts costing $120,000, extending its useful life by 2 years.
• On June 30, revised the estimated residual value to $70,000.
• On September 1, sold equipment for $15,000 that originally cost $200,000 with accumulated depreciation of $180,000.

Required:

• Calculate the annual depreciation expense for the year ending December 31, 20X1, before and after the upgrade and residual value revision.
• Prepare the necessary journal entries for the machinery transactions.
• Determine the gain or loss on the sale of the old equipment.
• Discuss the financial statement impact of these transactions.