Yakima Wheat Company acquired harvesting equipment for $90,000 with an expected useful life of 5 years and a $10,000 expected residual value. Yakima Wheat used straight-line depreciation. During its fourth year of service, cash expenditures related to the equipment were as follows:

1. Oiling and greasing, $200.

2. Replacing belts and hoses, $450.

3. Major overhaul during the final week of the year, including the replacement of an engine. The useful life of the equipment was extended from 5 to 7 years. The cost was $27,000. The residual value is now expected to be $11,000, instead of $10,000.

Indicate in words how each of the three items would affect the income statement and the balance sheet in the fourth year. Prepare a tabulation that compares the ...