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 Depreciation Remaining useful life Replacement Equipment $280,000 Cost 133,000 Operating expenses 10,500 Salvage value 172,000 Useful life 144,000 141,000 5 years $281,000 52,000 10,500 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? Since the relevant costs of operating the new equipment are the old equipment should be

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 Depreciation Remaining useful life Replacement Equipment $280,000 Cost 133,000 Operating expenses 10,500 Salvage value 172,000 Useful life 144,000 141,000 5 years $281,000 52,000 10,500 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? Since the relevant costs of operating the new equipment are the old equipment should be

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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Finch 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 $114,000 113,000 22,000 51,000 31,000 Old 8 years Total cost Should the equipment be replaced? Replacement Equipment $118,000 112,000 11,000 *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 8 years
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
Victor Mineli, the new controller of Skysong, Inc., has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2022. Here are his findings: Accumulated Useful life Date Depreciation (in years) Salvage Value Type of Asset Acquired Cost Jan. 1, 2022 Old Proposed Old Proposed Building Jan. 1, 2014 $829,000 $157,000 40 58 $44,000 $52,000 Warehouse Jan. 1, 2017 108,000 20,740 25 20 4,300 21,260 All assets are depreciated by the straight-line method. Skysong, Inc. uses a calendar year in preparing annual adjusting entries and financial statements. After discussion, management has agreed to accept Victor's proposed changes. (The "Proposed" useful life is total life, not remaining life.)
Vernon Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows. Existing Equipment Replacement Equipment Cost $ 110,000 Cost $ 114,000 Operating expenses* 105,000 Operating expenses* 112,000 Salvage value 27,000 Salvage value 13,000 Market value 41,000 Useful life 8 years Book value 32,000 Remaining useful life 8 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.RequiredCalculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced?
Vernon Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows. Replacement Equipment. $111,000 Existing Equipment Cost $113,000 Cost Operating expenses* 106,000 Salvage value 28,000 Operating expenses* Salvage value Market value 56,000 Useful life Book value 33,000 Remaining useful life 10 years 106,000 16,000 10 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 Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? Total cost Old New Should the equipment be replaced?
Sheridan Company is contemplating the replacement of an old machine with a new one. The following information has been gathered: Price Accumulated Depreciation Remaining useful life Useful life: Annual operating costs Old Machine $240000 72000 10 years $192000 New Machine $480000 -0- 10 years $144000 If the old machine is replaced, it can be sold for $19200. The company uses straight-line depreciation with a zero salvage value for all of its assets. Which of the following amounts is relevant to the replacement decision?
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LN Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: Old Machine New Machine Original cost $10,700 $9,000 Useful life 10 years 3 years Current age 7 years 0 years Remaining useful life 3 years 3 years Accumulated depreciation $7,490 Not acquired yet Book value $3,210 Not acquired yet Current disposal value (in cash ) $2,200 Not acquired yet Terminal disposal value (3 years from now) $0 $0 Annual cash operating costs $17,500 $15,500 LN Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should LN Manufacturing replace the old machine? Explain.