Brixton Textiles is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows: Existing Equipment Cost Operating expenses* Salvage value Market value Book value 4:42 Depreciation Remaining useful life k Replacement Equipment $258,000 Cost $289,000 135,000 Operating expenses 51,100 10,600 Salvage value 174,000 Useful life 10,600 5 years 145,000 125,000 5 years *The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment. Required Based on this information, should the old machine be replaced? vant costs of operating the new equipment are higher by the old equipment should be kept

Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter19: Accounting For Plant Assets, Depreciation, And Intangible Assets
Section: Chapter Questions
Problem 1AFE
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Brixton Textiles is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment
and the potential replacement equipment follows:
Existing Equipment
Cost
Operating expenses*
Salvage value
Market value
Book value
4:42
Depreciation
Remaining useful life
k
Replacement Equipment
$258,000 Cost
$289,000
135,000 Operating expenses
51,100
10,600 Salvage value
174,000 Useful life
10,600
5 years
145,000
125,000
5 years
*The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life
of the equipment.
Required
Based on this information, should the old machine be replaced?
vant costs of operating the new equipment are
higher
by
the old equipment should be
kept
Transcribed Image Text:Brixton Textiles is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows: Existing Equipment Cost Operating expenses* Salvage value Market value Book value 4:42 Depreciation Remaining useful life k Replacement Equipment $258,000 Cost $289,000 135,000 Operating expenses 51,100 10,600 Salvage value 174,000 Useful life 10,600 5 years 145,000 125,000 5 years *The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment. Required Based on this information, should the old machine be replaced? vant costs of operating the new equipment are higher by the old equipment should be kept
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