keep or buy new machine
Old machine New machine Original cost $20,000 $14,000 Useful life 5 years 3 years Current age 2 years 0 years Remaining useful life 3 years 3 years Accumulated depreciation $8,000 Not acquired yet Book value $12,000 Not acquired yet Current disposal value $3,000 Not acquired yet Salvage value (end of life) $0 $0 Annual operating cost $10,000 $8,000
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Book & Accounting Bookstore has used an old coding machine for 3 years and to buy...
Book & Accounting Bookstore has used an old coding machine for 3 years and to buy a new coding machine to help control book inventories. The price of new machine is $35,000 and it requires working capital of $4,000. Its estimated useful life is 5 years and estimated salvage value for the calculation of depreciation is $5,000. The disposal value of the new machine will be $6,000 at the end of its useful life. Recovery of working capital will be...
RFJ is planning the replacement of a machine that is currently used in the manufacturing of...
RFJ is planning the replacement of a machine that is currently used in the manufacturing of staple pin. The following information is provided: Old Machine New Machine Original cost $45,000 $35,000 Useful life 10 5 Current age 5 0 Book value 25,000 - Present disposal value 8,000 - Future disposal value 0 0 Annual operating cost 7,000 4,000 17. Based on the above information, what is the difference in cost between keeping the old machine and replacing it? A) $37,000...
Testbank Question 55 Bailey Corporation is considering modernizing its production by purchasing a new machine and...
Testbank Question 55 Bailey Corporation is considering modernizing its production by purchasing a new machine and selling an old machine. The following data have been collected on this investment: New Machine Old Machine Cost Accumulated amortization Remaining life Current salvage value Salvage value in 4 years Annual cash operating costs $40,000 $20,000 4 years $5,000 $0 $18,000 Cost Estimated useful life Salvage value in 4 years Annual cash operating costs $19,000 4 years $5,000 $14,000 The income tax rate is...
work is not needed Question 44 Smith Industries is considering replacing a machine that is presently...
work is not needed
Question 44 Smith Industries is considering replacing a machine that is presently used in its production process. The following information is available: Old Machine Replacement Machine $45,000 $35.000 5 Original cost Remaining useful life in years Current age in years Book value 5 0 5 $25,000 $8,000 Current disposal value in cash Future disposal value in cash (in 5 years) Annual cash operating costs $0 $0 $7,000 $4,000 For a machine replacement decision which of the...
Purinton Company is considering replacing a metal cutting machine with a newer model. Here are the...
Purinton Company is considering replacing a metal cutting machine with a newer model. Here are the data the management accountant prepares for the existing (old) machine and the replacement (new) machine: Old New Original Cost $1,000,000 $600,000 Useful Life 5 Years 2 Years Current Age 3 Years 0 Years Remaining Useful Life 2 Years 2 Years Accumulated Depreciation $600,000 n.a. Current Disposal Value $40,000 n.a. Terminal Disposal Value $0 $0 Annual Operating Costs $800,000 $460,000 Annual Revenues $1,100,000 $1,100,000 Purinton...
Example 1 JJ company wants to replace the old machine. Machine is used in molding the...
Example 1 JJ company wants to replace the old machine. Machine is used in molding the components. The old machine was acquired three year ago. Its remaining useful life is 5 years and salvage value is $10,000. Book value of old machine is $70,000. Old machine cash operating cost is $20,000 per year. A new machine is the speed accelerating machine. Its initial cost is $ 150,000. New machine cash 's operating cost is $12,000 per year. Its useful life...
Old Machine $670,000 Replacement Machine $540,000 Original cost Useful life in years Current age in years Book value Di...
Old Machine $670,000 Replacement Machine $540,000 Original cost Useful life in years Current age in years Book value Disposal value now Disposal value in 4 years Annual cash operating costs le $400,000 $142,000 $0 $105,000 $61,000 For the decision to keep the old machine, the relevant costs of keeping the old machine is O A. $888,000 O B. $420,000 OC. $562,000 OD. $105,000
Gertrude's Bakery is thinking about replacing the convection oven with new, more energy-efficient model. Information related...
Gertrude's Bakery is thinking about replacing the
convection oven with new, more energy-efficient model. Information
related to the old and new oven follows:
Begin by determining whether each item is relevant or
irrelevant for this decision. If an item is irrelevant, select why
it is irrelevant (dont differ, sunk cost)
1. Which of the costs and benefits above are relevant
to the decision to replace the oven?
2. What information is irrelevant? Why is it irrelevant?
3. Should Gertrude's Bakery...
Bailey Corporation is considering modernizing its production by purchasing a new machine and selling an old...
Bailey Corporation is considering modernizing its production by
purchasing a new machine and selling an old machine. The following
data have been collected on this investment:
Testbank Question 57 Bailey Corporation is considering modernizing its production by purchasing a new machine and selling an old machine. The following data have been collected on this investment: Old Machine Cost Accumulated amortization Remaining life Current salvage value Salvage value in 4 years Annual cash operating costs $40,000 $20,000 4 years $5,000 New...
Replacement Machine Old Machine Original cost $650,000 $520,000 Useful life in years 6 12 Current age...
Replacement Machine Old Machine Original cost $650,000 $520,000 Useful life in years 6 12 Current age in years 6 Book value $390,000 Disposal value now $112,000 $0 $0 Disposal value in 6 years Annual cash operating costs $103,000 $64,000 The difference between keeping the old machine and replacing the old machine is O A. $910,000 in favor of replacing the old machine O B. $174,000 in favor of replacing the old machine c. $910,000 in favor of keeping the old...
Book & Accounting Bookstore has used an old coding machine for 3 years and to buy a new coding machine to help control book inventories. The price of new machine is $35,000 and it requires working capital of $4,000. Its estimated useful life is 5 years and estimated salvage value for the calculation of depreciation is $5,000. The disposal value of the new machine will be $6,000 at the end of its useful life. Recovery of working capital will be...
Testbank Question 55 Bailey Corporation is considering modernizing its production by purchasing a new machine and selling an old machine. The following data have been collected on this investment: New Machine Old Machine Cost Accumulated amortization Remaining life Current salvage value Salvage value in 4 years Annual cash operating costs $40,000 $20,000 4 years $5,000 $0 $18,000 Cost Estimated useful life Salvage value in 4 years Annual cash operating costs $19,000 4 years $5,000 $14,000 The income tax rate is...
work is not needed
Question 44 Smith Industries is considering replacing a machine that is presently used in its production process. The following information is available: Old Machine Replacement Machine $45,000 $35.000 5 Original cost Remaining useful life in years Current age in years Book value 5 0 5 $25,000 $8,000 Current disposal value in cash Future disposal value in cash (in 5 years) Annual cash operating costs $0 $0 $7,000 $4,000 For a machine replacement decision which of the...
Example 1 JJ company wants to replace the old machine. Machine is used in molding the components. The old machine was acquired three year ago. Its remaining useful life is 5 years and salvage value is $10,000. Book value of old machine is $70,000. Old machine cash operating cost is $20,000 per year. A new machine is the speed accelerating machine. Its initial cost is $ 150,000. New machine cash 's operating cost is $12,000 per year. Its useful life...
Old Machine $670,000 Replacement Machine $540,000 Original cost Useful life in years Current age in years Book value Disposal value now Disposal value in 4 years Annual cash operating costs le $400,000 $142,000 $0 $105,000 $61,000 For the decision to keep the old machine, the relevant costs of keeping the old machine is O A. $888,000 O B. $420,000 OC. $562,000 OD. $105,000
Gertrude's Bakery is thinking about replacing the
convection oven with new, more energy-efficient model. Information
related to the old and new oven follows:
Begin by determining whether each item is relevant or
irrelevant for this decision. If an item is irrelevant, select why
it is irrelevant (dont differ, sunk cost)
1. Which of the costs and benefits above are relevant
to the decision to replace the oven?
2. What information is irrelevant? Why is it irrelevant?
3. Should Gertrude's Bakery...
Bailey Corporation is considering modernizing its production by
purchasing a new machine and selling an old machine. The following
data have been collected on this investment:
Testbank Question 57 Bailey Corporation is considering modernizing its production by purchasing a new machine and selling an old machine. The following data have been collected on this investment: Old Machine Cost Accumulated amortization Remaining life Current salvage value Salvage value in 4 years Annual cash operating costs $40,000 $20,000 4 years $5,000 New...
Replacement Machine Old Machine Original cost $650,000 $520,000 Useful life in years 6 12 Current age in years 6 Book value $390,000 Disposal value now $112,000 $0 $0 Disposal value in 6 years Annual cash operating costs $103,000 $64,000 The difference between keeping the old machine and replacing the old machine is O A. $910,000 in favor of replacing the old machine O B. $174,000 in favor of replacing the old machine c. $910,000 in favor of keeping the old...
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