Problem: Module 6 Textbook Problem 10 Learning Objective: 6-5 Make appropriate asset replacement decisions Thornton Company 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 Remaining useful life $102,000 102,000 20,000 59,000 33,000 Old 6 years Total cost Should the equipment be replaced? Replacement Equipment $118,000 112,000 15,000 *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. Cost Operating expenses. Salvage value Useful life Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? New 6 years

Problem: Module 6 Textbook Problem 10 Learning Objective: 6-5 Make appropriate asset replacement decisions Thornton Company 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 Remaining useful life $102,000 102,000 20,000 59,000 33,000 Old 6 years Total cost Should the equipment be replaced? Replacement Equipment $118,000 112,000 15,000 *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. Cost Operating expenses. Salvage value Useful life Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? New 6 years

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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QUESTION 8 10 For th below two machines and based on AW analysis which machine we should select? MARR=10% Machine A Machine B First cost, $ 28,660 107,296 Annual cost, $/year Salvage value, $ Life, years 9,892 7,673 4,181 3 infinite Answer the below question: B- the AW for machine B=
QUESTION 3 For the below ME alternatives, which machine should be selected based on the AW analysis. MARR=10% First cost, S Annual cost, $/year Salvage value, $ Life, years Machine A Answer the below questions: B-AW for machine B= First cost, $ Annual cost, $/year Salvage value, $ Life, years 15000 9752 4,000 Machine A Answer the below questions: C-AW for machine C = 15000 Machine B 15892 4,000 22023 QUESTION 4 For the below ME alternatives, which machine should be selected based on the AW analysis. MARR=10%. 6,000 5,000 Machine B 30000 Machine C 6,000 5,000 10000 4,000 1,000 Machine C 11779 4,000 1,000
Question Content Area A used machine with a purchase price of $36,814, requiring an overhaul costing $9,591, installation costs of $6,837, and special acquisition fees of $34,674, would have a cost basis of a.$139,018 b.$87,916 c.$36,814 d.$46,405
Invoice price |Shipping cost Installation cost Cost to tear down old swing Insurance to cover 2019 and 2020 Necessary repair during installation 261,100 1,100 6,000 200 4,000 2,000 Required 1 Determine the capitalized cost of the asset. Туре of Cost $ Value of Cost Page 1 2 Determine the proper treatment for the following expenditures. Key Capitalize Expense Treatment Oil the gears of the swing each month, $25 Installed new swing seats in year 2, $22,000 Replaced the motor in year 3, $32,000 Repainted the posts in year 3, $600 Spray the swing seats with sanitizer each week, $45 Repaired broken exterior light on two of the swings, $175
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Chapter 10 Problem Set A Problem 10-1 On January 1, 2019 Crampton Company acquired land on which to construct a new distribution warehouse. During 2019, the company made expenditures as follows: Contract price of the land $600,000 Closing costs $23,000 Hoerr Excavating for clearing and grading $65,000 Sparks Concrete Construction for sidewalk and parking lot $158,500 Touchstone Lighting for parking lot lighting $21,500 J Hacker and Associates, Architects $71,000 Town of Normal for building permits $9,500 Lewis General Contractors $4,100,000 Crampton also purchased $1,450,000 of warehousing equipment and conveyors. The entire facility was placed in service before December 31, 2019. Prepare Crampton Company’s PPE section of their balance sheet dated December 31, 2019 before the adjusting entries for depreciation
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Exercise 6-18A (Static) Asset replacement decision LO 6-5 Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement. Management was presented with the following information to assist in their decision: • The old machine was purchased three years ago for $720,000 and has a current book value using straight-line depreciation of $400,000. • The old machine incurs operating expenses of $60,000 per year. • The current disposal value of the old machine is $170,000; if it is kept nine more years, its remaining value would be $20,000. • The replacement machine would cost $480,000 and have a useful life of nine years. • The replacement machine has an expected salvage value of $130,000 after nine years. • The replacement machine would require $26,000 per year in operating expenses. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Purchase New Machine Machine Total…
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