Chapter 6, Problem 31P

Recording continuing expenditures for plant assets

Morris Inc. recorded the following transactions over the life of a piece of equipment purchased in 2018:

Required

a. Use a horizontal statements model like the following one to show the effects of these transactions on the elements of the financial statements. Use + for increase, − for decrease, and NA for not affected. The first event is recorded as an example.

b. Determine the amount of depreciation expense to be reported on the income statements for the years 2018 through 2022.

c. Determine the book value (cost − accumulated depreciation) Morris will report on the balance sheets at the end of the years 2018 through 2022.

d. Determine the amount of the gain or loss Morris will report on the disposal of the equipment on October 1, 2023.