Tangible Assets

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

2. On 1/1/2005 Freeloads Corp. spends $25,000 in a capital improvement to upgrade the machine frame and correspondingly revises the estimate of the residual value to $33,000 and the estimate of total useful life to 27 years. Calculate the straight line depreciation for 2005.

3. On 2/1/2006 Freeloads Corp spends $1,000 cash on regular repairs and maintenance of the machine. Whats the financial statements effect?

   Assets = Liabilities + Equity Sales - Expenses = Profit