At the end of 2013, a telecommunications company had total assets of $15.3 billion and total liabilities of $10.7 billion. Included among the assets were property, plant, and equipment with a cost of $16.4 billion and accumulated depreciation of $9.1 billion.
Suppose that the company completed the following selected transactions during 2014. The company earned total revenues of $11.6 billion and incurred total expenses of $9.89 billion, which included depreciation of $1.84 billion. During the year, the company paid $1.8 billion for new property, plant, and equipment, and sold old property, plant, and equipment for $0.2 billion. The cost of the assets sold was $0.29 billion and their accumulated depreciation was $0.29 billion.
Requirements
1. Explain how to determine whether the company had a gain or a loss on the sale of the old property, plant, and equipment. What was the amount of the gain or loss, if any?
2. Show how the company would report property, plant, and equipment on the balance sheet at December 31, 2014.
3. Show how the company would report operating activities and investing activities on its statement of cash flows for 2014. The company's statement of cash flows starts with net income.