What is the salvage value of old equipment considered to be?
a.A relevant cost
b.A non-incremental cost
c.An opportunity cost
d.A cost that is not differential
OPTION - A RELAVANT COST.
Salvage value shall be considered as relavant cost because the cost is also relavant in decision making.
What is the salvage value of old equipment considered to be? a.A relevant cost b.A non-incremental...
Kindly provide an explanation as to what are the main concepts pertaining to arriving at relevant costing and discuss how these principles might apply to a manufacturing company. Answer: A relevant cost is a current or future cost that will differ among alternatives. For example, relevant cost of material is the raw material cost that needs to be considered while taking a managerial decision. Relevant cost of material may be in the form of incremental cash flows or opportunity cost....
At times firms will need to decide if they want to continue to use their current equipment or replace the equipment with newer equipment.The company will need to do replacement analysis to determine which option is the best financial decision for the company.Price Co. is considering replacing an existing piece of equipment. The project involves the following:•The new equipment will have a cost of $9,000,000, and it will be depreciated on a straight-line basis over a period of six years (years 1–6).•The...
Which of the following would be considered a relevant fixed cost in making a special order decision? Unavoidable fixed costs associated with current business. Contribution margin of any current business replaced. Depreciation on existing production equipment. Incremental fixed costs associated with the order.
. The new equipment will have a cost of $9,000,000, and it will be depreciated on a straight-line basis over a period of six years (years 1-6) The old machine is also being depreciated on a straight-line basis. It has a book value or 200,000 (at year 0) and four more years of depreciation left ($50,000 per year). . The new equipment will have a salvage value of $0 at the end of the project's life (year 6). The old...
E1. Bobby purchases equipment with cost of $40,000 and salvage value of $3,500 and life of 4 years. Create a STRAIGHT LINE DEPRECIATION SCHEDULE. Year Depr. Cost Rate Depr. Exp. Accum. Depr. Book Value E2. Use the same Cost, SV and life for a depreciation schedule using DOUBLE DECLINING BALANCE Cost-$40,000 SV=$3,500 and Life = 4 years. Year Book Value Beg. Rate Depr. Exp. Accum. Depr. Book Value End 2 E3. Carlson purchased Equipment for $56,000 with salvage value $7,000...
Equipment cost: 262,500 The equipment has a salvage value of $10,000, life expectancy of 5 years. Calculate depreciation for all years necessary using the double declining balance. What is the book value at the beginning of year 6? depreciation book-value year1 year2 year3 year4 year5 year6
Equipment with a cost of $456000 has an estimated salvage value of $36000 and an estimated life of 4 years or 10000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the first full year, during which the equipment was used for 2200 hours? $92400. $114000. $110250. $105000.
• The new equipment will have a cost of $600,000, and it will be depreciated on a straight-line basis over a period of six years (years 1-6). • The old machine is also being depreciated on a straight-line basis. It has a book value of $200,000 (at year 0) and four more years of depreciation left ($50,000 per year). • The new equipment will have a salvage value of $0 at the end of the project's life (year 6). The...
Equipment with a cost of $400,000 has an estimated salvage value of $25,000 and an estimated life of 4 years or 15,000 hours. It is to be depreciated using the units-of-activity method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? $100,000 $113,800 $82,500 $93,750
Company A purchased equipment. The cost for the equipment is 500,000. Estimated salvage value after 5 years is 50,000. 1. Determine the depreciation for year 3 using DDB, 150% DB and SL methods. 2. For DDB and 150% DB methods, determine the implied salvage after 5 years. 3. Calculate the depreciation rate d for each year for the DDB method. 4. Plot the book value of DDB and SL depreciation.