Assume that at the end of 20X2, Verizon, the telecommunications company, had total assets of $15.2 billion and total liabilities of $10.5 billion. Included among the assets were property, plant, and equipment with a cost of $17.1 billion and accumulated depreciation of $10.2 billion.
Assume that Verizon completed the following selected transactions during 20X3: The company earned total revenues of $16.9 billion and incurred total expenses of $13.2 billion, which included depreciation of $1.7 billion. During the year, Verizon paid $2.8 billion for new property, plant, and equipment and sold old plant assets for $1.0 billion. The cost of the assets sold was $1.6 billion, and their accumulated depreciation was $0.4 billion.
Required
1. Explain how to determine whether Verizon had a gain or a loss on the sale of old plant assets. What was the amount of the gain or loss, if any?
2. Show how Verizon would report property, plant, and equipment on the balance sheet at December 31, 20X3, after all the year's activity.
3. Show how Verizon would report operating activities and investing activities on its statement of cash flows for 20X3. Ignore gains and losses.