Three years ago Yeagley and Sons purchased the three assets listed in the following table. The chief financial officer, Kathy Dillon, is presently trying to decide what to do with each asset. She has three choices for each asset: (1) sell it, (2) sell it and replace it with an equivalent asset, or (3) keep it. The following information is provided to aid her decision.

REQUIRED:a. Assuming that Kathy chooses to keep Asset A and Asset B and sell and replace Asset C, evaluate her decisions. What decisions should she have made? Support your choices.b. How useful was the original cost of each asset in the evaluation of Kathy??s decisions?c. Assume that Kathy proceeds with her decisions. According to generally accepted accounting principles, at what dollar amount would each asset be carried on Yeagley??s balance sheet? What principles of financial accounting would beinvolved?

Present Value Present Value of Future Cash Flows Produced by Old Asset Fair of Future Cash Replacement Market Value Flows of Original Cost Asset Equivalent Asset Cost S1,500 500 3,000 $4,000 S1,000 S2.500 55.000 3.500 5.000 2,000 1,500 2,000 2.500 3.500