Caterpillar Inc. (CAT) is a world leader in the manufacture of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. CAT reported the following in a disclosure note accompanying its 2008 financial statements:
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Also, Note 10 disclosed that the total cost of property, plant, and equipment included $575 and $189 (dollars in millions) in land at the end of 2008 and 2007, respectively. In addition, the statement of cash flows for the year ended December 31, 2008, reported the following as cash flows from investing activities:
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The statement of cash flows also reported 2008 depreciation and amortization of $1,980 million (depreciation of $1,919 and amortization of $61).
Required:
1. Assume that all property, plant, and equipment acquired during 2008 were purchased for cash. Determine the amount of gain or loss from dispositions of property, plant, and equipment that Caterpillar recognized during 2008.
2. Assume that Caterpillar uses the straight-line method to depreciate plant and equipment. What is the approximate average service life of CAT's depreciable assets?