The Boeing Company reported in its 2014 annual report $1,414 million in depreciation expense and $492 million in amortization expense for the year ending December 31, 2014.
a. Describe how the recognition of depreciation and amortization affects the basic accounting equation.
b. As reported in the footnotes, Boeing’s accumulated depreciation balance grew during the year from $15,070 million to $15,689 million. The historic cost of property, plant, and equipment was $26,696 and $25,294 in 2014 and 2013, respectively. During 2014 the company purchased property, plant, and equipment for a total of $2,236 million and collected proceeds of $34 million on sales of property, plant, and equipment. Compute the gain or loss on the sale of property, plant, and equipment in 2014. On which financial statement would this appear, and how would these transactions affect the statement of cash flows?