P22000 equipment was purchased three years ago, is contemplating for replacement against a challenger whose cost is P18000. The existing equipment can be traded, in today at P6000 and will have salvage value of P2000, if kept for another 6 years. The annual operating cost of the old equipment is P7000. The challeneger has an annual operating and maintenance cost of P5500 and its salvage value P3000 at the end of 6 years, i equals 15%. Determine whether or not the equipment should be replaced.

P22000 equipment was purchased three years ago, is contemplating for replacement against a challenger whose cost is P18000. The existing equipment can be traded, in today at P6000 and will have salvage value of P2000, if kept for another 6 years. The annual operating cost of the old equipment is P7000. The challeneger has an annual operating and maintenance cost of P5500 and its salvage value P3000 at the end of 6 years, i equals 15%. Determine whether or not the equipment should be replaced.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 13PB: Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and...

See similar textbooks

Similar questions

Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and is expected to be driven for ten years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After five years of recording depreciation, Montezuma determines that the delivery truck will be useful for another five years (ten years in total, as originally expected) and that the salvage value will increase to $10,000. Determine the depreciation expense for the final five years of the assets life, and create the journal entry for years 6â€“10 (the entry will be the same for each of the five years).
Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.
The price of a system of jockey pumps is P5,500,000. PLM decided to purchase this system and spent P215,500 for shipping and installation. The equipment will last for 10 years with a salvage value of 3% of its total cost. Determine the following: a. Yearly charge of depreciation using SL method. b. Depreciation charge on the 6 th year, and book value at the end of 8th year using SYD method.
5. The price of a system of jockey pumps is P5,500,000. PLM decided to purchase this system and spent P215,500 for shipping and installation. The equipment will last for 10 years with a salvage value of 3% of its total cost. Determine the following: a. Yearly charge of depreciation using SL method. b.Depreciation charge on the 6thyear, and book value at the end of the 8thyear using SYD method.
7) purchase a new one or upgrade the existing machine. The existing machine has a remaining life of 5 years and is expected to have a salvage value of $20,000 at the end of its useful life. Operating and maintenance costs have been $25,000 per year. The company uses an MARR of 10% per year compounded annually for making economic decisions. Alternative 1. Á new machine is purchased, and the existing machine is sold at its market value of $50,000. A new machine costs $150,000, has an annual O&M cost of $15,000, and a salvage value of $25,000 at the end of 5 years. Alternative 2. The existing machine is upgraded, and the upgrades are expected to cost $60,000 now. The upgraded machine's salvage value and annual O&M costs are expected to remain the same as that of the existing To meet increased demand for its product, a company can either sell the existing machine and machine. a) Compute the present worth for Alternative 1. b) Compute the present worth for Alternative 2. c) Based on the…
the directed (traight Builtrite is considering purchasing a new machine that would com $80,000 and the machine line) down to $0 over its five-year life. At the end of five years, it is believed that the machine could the side for $15,000 The surrent machine being used was purchased 3 years ago at a cost of $40,000 and is being direct din ter over t 5 year life. The current machine's salvage value now is $12,000. The new machine would increase EBOT by $54000 annually Builtrite's marginal tax rate is 34%, What the RATFOF's associated with the purchase of this machine? $39,040 $38,360 $30,300 $35,040.
An old machine has a first cost of P10M and an annual operating cost of P2,023,479 and a useful life of 5 years with a salvage value of P1M. On its 3rd year, the company thinks of selling it at P7,525,442 and replaces it with a new machine having a cost of P7.5M and an annual operating cost of PO.4M during a 6- year life and a salvage value of PO.5M. With an interest of 21% cpd.-a., what is the Annual Equivalent Cost of the old Machine?
A new piece of equipment, with a life of eight years, costs $12000 to purchase. The end of life salvage value is $2000. What is the annual decrease in value with straight line (SL) depreciation?