At the end of the annual accounting period. December 31. 2003. Shafer Company's records reflected the following for Machine A:

During January 2004. the machine was renovated at a cost of SI 1.000. As a result, the estimated life increased from five years to eight years, and the residual value increased from S3.000 to S5.000. The company uses straight-line depreciation.
Required: 1. Give the journal entry to record the renovation. 2. How old was the machine at the end of 2003? 3. Give the adjusting entry at the end of 2004 to record straight-line depreciation for the j ear. 4. Explain the rationale for your entries in requirements 1 and 3.

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Cost when acquired Accumulated depreciation $28.000 10.000