Chapter 11, Problem 42E

Determining Cash Flows 1from Investing Activities

Airco owns several aircraft and its balance sheet indicated the following amounts for its aircraft accounts at the end of 2019 and 2018:

Required:

1. Assume that Airco did not sell any aircraft during 2019. Determine the amount of depreciation expense for 2019 and the cash spent for aircraft purchases in 2019.

2. If Airco sold for cash aircraft that cost $4,100,000 with accumulated depreciation of $3,825,000 producing a gain of $193,000, determine (a) the amount of depreciation expense, (b) the cash paid for aircraft purchases in 2019, and (c) the cash inflow from the disposal of aircraft.