Chapter 7, Problem 7.71AP

(Learning Objectives 1, 3, 4, 6, 8: An21yze plant asset tr2nsactions from a company’s financial statements) Savanaugh Stores, Inc., sells electronics and appliances. The excerpts that follow are adapted from Savanaugh’s financial statements for 2018 and 2017

Balance Sheet (dollars in millions)	March 31,
	2018	2017
Assets
Total current assets...............................	$7,986	$6,906
Property, plant, and equipment.............	1,833	1,196
Less: Accumulated depreciation............	2,129	1,723
Goodwill.............................................	552	512

	Year Ended
	March 31.
Statement of Cash Flows (dollars in millions)	2018	2017
Operating activities:
Net income..................................................................	$1,149	$989
Noncash items affecting net income:
Depreciation.............................................................	473	460
Gain on sale of property, plant and equipment..........	(142)	0
Investing activities:
Additions to property, plant, and equipment...............	(712)	(616)
Sale of property, plant and equipment..........................	150	0

Requirements

1. 1. How much was Savanaugh’s cost of plant assets at March 31, 2018? How much was the book value of plant assets? Show computations.
2. 2. The financial statements provide three pieces of evidence that Savanaugh purchased plant assets and goodwill during fiscal year 2018. What are they?
3. 3. Prepare T-accounts for Property, Plant, and Equipment: Accumulated Depreciation: and Goodwill. Then fill in the T-accounts with information from the comparative balance sheets and cash flow statements. Label each increase or decrease and give its dollar amount.
4. 4. Prepare the journal entry for the sale of property, plant, and equipment in 2018.