Bonita Industries is contemplating the replacement of an old machine with a new one. The following information has been gathered:   Old Machine   New Machine Price $250000   $500000 Accumulated Depreciation 75000   -0- Remaining useful life 10 years   -0- Useful life -0-   10 years Annual operating costs $205000   $150000 If the old machine is replaced, it can be sold for $20000. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) of replacing the old machine is $(50000) $(5000) $20500 $70000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Bonita Industries is contemplating the replacement of an old machine with a new one. The following information has been gathered:

  Old Machine   New Machine
Price $250000   $500000
Accumulated Depreciation 75000   -0-
Remaining useful life 10 years   -0-
Useful life -0-   10 years
Annual operating costs $205000   $150000


If the old machine is replaced, it can be sold for $20000. The company uses straight-line depreciation with a zero salvage value for all of its assets.

The net advantage (disadvantage) of replacing the old machine is

$(50000)
$(5000)
$20500
$70000
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