Indicate How Each Event Affects the Financial Statements

Essay

Indicate how each event affects the financial statements. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter dollar amounts.Increase = I Decrease = D Not Affected = NAOn January 1, Year 1, the Baker Company purchased an asset for $200,000. The asset had a $50,000 salvage value and a 10-year life. Baker uses the straight-line method. At the beginning of Year 3, the asset was sold for $174,000. Show how the sale will affect Baker's financial statements, assuming that Baker uses straight-line depreciation.