Leslie Company sells business stationery imprinted with acustomer's business name and address. To do this, itpurchased 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 its depreciable assets. On August 1,2007, the manager of the print shop was persuaded to purchase a newmachine that operated more efficiently. The old machine was sold atthat time for $ 5,000.
1. Calculate the depreciation expense recorded on the old machinefor each year of use.
2. Calculate any gain or loss on disposal of the old machine.
3. Show how information about the printing machine transactionswould be reported on the statement of cash flows for years 2004through 2007. Assume the indirect format is used.
4. How would the information about the printing machine affect theincome statement for years 2004 through 2007?