Leslie Company sells business stationery imprinted with acustomer’s business nam

ID: 2433552 • Letter: L

Question

Leslie Company sells business stationery imprinted with acustomer’s business name and

address. To do this, it purchased a printing machine costing$48,000 on January 1, 2004. The

machine has an expected useful life of five years and anestimated salvage value of $3,000. Leslie

Company uses straight-line depreciation for all of itsdepreciable assets.

On August 1, 2007, the manager of the print shop was persuadedto purchase a new machine

that operated more efficiently. The old machine was sold at thattime for $5,000.

a. Calculate the depreciation expense recorded on the oldmachine for each year of use.

b. Calculate any gain or loss on disposal of the oldmachine.

c. Show how information about the printing machine transactionswould be reported on the

statement of cash flows for years 2004 through 2007. Assume theindirect format is used.

d. How would the information about the printing machine affectthe income statement for

years 2004 through 2007?

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