Question: SteelTubes had sales of ($300) million this year. Expenses were ($250) million. Aside from these figures, the company also invested in new mills for carbon

SteelTubes had sales of $$300$ million this year. Expenses were $$250$ million. Aside from these figures, the company also invested in new mills for carbon steel tubing, complete with peripheral loading, straightening, and coiling equipment plus facility reconfiguration totaling $$14$ million. SteelTubes believes the usable life of the mill will be only 7 years, owing to technological advances. There were no other financial considerations.

a. Looking strictly at cash flows, what will be reported as the financial gain or loss? Is this a fair representation of financial performance?

b. If, for internal financial reporting, the manufacturer writes off equal amounts of the capital investment over the usable life, beginning this year, what will be the reported financial gain or loss?

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