Hasbro Inc. designs, manufactures, and markets high- quality toys, games, and infant products. The company€™s revenues exceed $ 4.0 billion. In the toy business, it is very difficult to determine the life expectancy of a product. Products that children love one year may sit on the shelf the following year. As a result, companies in the toy business often sell productive assets that are no longer needed. Assume that on December 31, 2014, the end of the company€™s fiscal year, Hasbro€™s records showed the following data about a machine that was no longer needed to make a toy that was popular last year:

On July 1, 2015, the machine was sold for $ 76,000 cash.
Required:
1. How old was the machine on January 1, 2015? Show computations.
2. Indicate the effect (i.e., the amount and direction€”increase or decrease) of the sale of the machine on July 1, 2015, on
a. Total assets.
b. Net earnings.
c. Cash flows (for each section of the statement: operating, investing, and financing activities).

Transcribed Image Text:

Machine, original cost Accumulated depreciation Based on an estimated useful life of six years, a residual value of $22,000, and straight-line depreciation. $214,000 128,000