REX Stores Corporation, headquartered in Dayton, Ohio, is one of the nation€™s leading consumer electronics retailers operating more than 190 stores in 35 states. The following is a note from a recent annual report:

Required:
1. Assuming that REX Stores did not sell any property, plant, and equipment in the current year, what was the amount of depreciation expense recorded during the current year?
2. Assume that REX Stores failed to record depreciation during the current year. Indicate the effect of the error (i.e., overstated or understated) on the following ratios:
a. Earnings per share.
b. Fixed asset turnover.
c. Financial leverage.
d. Return onequity.

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(1) SUMMARY OF SIGNIFICANTACCOUNTING POLICIES- Property and Equipment-Property and equipment is recorded at cost. Depreciation is computed using the straight-line method. Estimated useful lives are 15 to 40 years for buildings and improvements, and 3 to 12 years for fixtures and euipment. Leasehold improvements are depreciated over 10 to 12 years. The components of cost at January 31 (current year) and (prior year) are as follows (amounts in dollars in thousands): Current Year Prior Year (dollars in thousands) Land Buildings and improve Fixtures and equipment Leasehold improvements Construction in progress S 38,519 101.448 18.567 9,797 S 38,567 99,448 18.471 9,882 1,251 167,619 (33,056) $134,563 ments 168,331 (36,922) S131,409 Less: Accumulated depreciation