John Aggie Company is considering the replacement of a piece of equipment with a newer model....
John Aggie Company is considering the replacement of a piece of equipment with a newer model. The following data has been collected:
| old equipment | new equipment | |
| purchase price | $150,000 | $150,000 |
| Accumulated depreciation | $100,000 | $0 |
| Annual operating costs | $70,000 | $45,000 |
If the old equipment is replaced now it can be sold for $15,000 . and the new equipment useful life is five years. the company uses straight-line depreciation with a zero salvage value for all of its assets. what is the net increase Or decrease in the cost of replacing the old equipment with the new equipment? Show your calculations.
Homework Answers
Amounts 60,000 75,000 10,000 Current liabilities section of balance sheet :- Particulars Accounts Payable Notes Payable, Due in 3 months FICA taxes Payable Warranty Liability Interest Payable Sales tax Payable Unearned revenue Mortgage Payable - Due in next year Total Current Liabilities 40,000 15,000 8,000 20,000 75,000 303,000
Net advantage (disadvantage) of replacing the old equipment with the new equipment : Change in Cost Particulars Keep Replace Increase (Decrease) Annual Operating costs 350,000 225,000 (125,000) New equipment cost 150,000 150,000 Old Equipment salvage value 15,000 (15,000) Total 365,000 375,000 10,000 Cost will increase by $ 10,000 due to replacing the old equipment with the new equipment
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John Aggie Company is considering the replacement of a piece of
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