The Boeing Company reported in its 2012 annual report $1,248 million in depreciation expense and $563 million in amortization expense for the year ending December 31, 2012.
a. Describe how the recognition of depreciation and amortization affects the basic accounting equation.
b. As reported in the footnotes, Boeing’s accumulated depreciation balance grew during the year from $13,993 million to $14,645 million. The historic cost of property, plant, and equipment was $24,305 and $23,306 in 2012 and 2011, respectively. During 2012 the company purchased property, plant, and equipment for a total of $1,703 million and collected proceeds of $97 million on sales of property, plant, and equipment. Compute the gain or loss on the sale of property, plant, and equipment in 2012. On which financial statement would this appear, and how would these transactions affect the statement of cash flows?