On January 1, 2013, Hartland Inc. paid $34,000 cash to purchase a taxi cab. The taxi had a four-year useful life and a $4,000 salvage value.
a. Determine the amount of depreciation expense that would appear on the 2013 and 2014 income statements.
b. Determine the amount of accumulated depreciation that would appear on the 2013 and 2014 balance sheets.
c. Explain how the purchase of equipment would affect the 2013 and 2014 statements of cash flows.