On January 1, Year 2, KimCom Boat Rentals purchased a boat that is to be used to produce rental income. The boat cost $120,000. It has an expected useful life of 10 years and a $20,000 salvage value. The boat produced rental income of $15,000 per year throughout its useful life. Assume that KimCom started Year 2 with a beginning cash balance of $130,000.

Required
a. Prepare an income statement and a statement of cash flows for Year 2, Year 3, and Year 4.
b. Determine the book value of the boat for Year 2, Year 3, and Year 4.