In preparing the annual financial statements for Terry Corporation, the correct manner of reporting the following items was not clear to the company's employees. Explain where each of the following items should appear in the financial statements.

a. The company keeps its delivery equipment for several years before disposing of the old equipment and buying new equipment. This year, for the first time in eight years, it sold old equipment for a gain of \(\$ 7,500\) and then purchased new equipment.

b. After amortizing a trademark for five years based on an expected life of seven years, the company decided this year that the value of the trademark would last four more years. As a result, the amortization for the current year is \(\$ 5,000\) instead of \(\$ 10,000\).

c. This year, the accounting department of the company discovered that two years ago, a cost had been charged to maintenance expense when it should have been charged to land. The after-tax effect of the charge to maintenance expense was \(\$ 35,000\).