Remaining useful life in years Current age in years Freda Enterprises is considering replacing a machine that is presently used in its production process. The following information is available: Original cost Replacement Machine $35,000 5 0 Old Machine $60,000 5 5 Book value $25,000 Current disposal value in cash $8,000 Future disposal value in cash (in 5 years) $0 $0 Annual cash operating costs $7,000 $4,000 Which of the information provided in the table is irrelevant to the replacement decision?

Remaining useful life in years Current age in years Freda Enterprises is considering replacing a machine that is presently used in its production process. The following information is available: Original cost Replacement Machine $35,000 5 0 Old Machine $60,000 5 5 Book value $25,000 Current disposal value in cash $8,000 Future disposal value in cash (in 5 years) $0 $0 Annual cash operating costs $7,000 $4,000 Which of the information provided in the table is irrelevant to the replacement decision?

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter9: Depreciation (deprec)

Section: Chapter Questions

Problem 1R: Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an...

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Fuller Industries is considering replacing a machine that is presently used in its production process. Which of the following amounts represents a sunk cost? Original cost Remaining useful life in years Current age in years Book value Current disposal value in cash Future disposal value in cash (in 5 years) Annual cash operating costs OA. $55,000 OB. $33,000 OC. $45,000 D. $9,000 Old Machine Replacement Machine $55,000 $45,000 5 5 5 0 $33,000 $9,000 $0 $0 $8,000 $4,000
Ahmed Corporation is considering replacing a machine that is presently used in its production process. The following information is available: Old New Machine Machine Original cost $45,000 $25,000 Remaining useful life in years 5 5 Current age in years 5 0 Book value $25,000 N/A Current disposal value in cash $5,000 N/A Future disposal value in cash (in five years) $0 $0 Annual cash operating costs $ 8,000 $ 6,000 Required: 1) Which of the data provided in the table are relevant to the decision?
Reference: Case Study S Dunn Manufacturing is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. Initial cost Benefits/year Machine X $120,000 $20,000 for the first 10 years and $9,000 for the next 10 years Life Salvage value $40,000 MARR 5.2. The NPW of machine X is A) $35,158 B) $48,192 C) $50,752 Machine Y $96,000 $12,000 per year for 20 years. 20 years 8% $20,000
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