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Crane Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: Original purchase cost Accumulated depreciation Estimated life Old Machine $353,600 The company 239,200 5 years > It is estimated that the new machine will produce annual cost savings of $88,400. The old machine can be sold to a scrap dealer for $8,800. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. < Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) LA $ tA New Machine tA $384,800 $ 5 years Retain Equipment purchase the new machine. $ $ LA Replace Equipment tA $ Net Income Increase/(Decrease)

Crane Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: Original purchase cost Accumulated depreciation Estimated life Old Machine $353,600 The company 239,200 5 years > It is estimated that the new machine will produce annual cost savings of $88,400. The old machine can be sold to a scrap dealer for $8,800. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. < Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) LA $ tA New Machine tA $384,800 $ 5 years Retain Equipment purchase the new machine. $ $ LA Replace Equipment tA $ Net Income Increase/(Decrease)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Crane Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: Original purchase cost Accumulated depreciation Estimated life Old Machine $353,600 The company 239,200 5 years > It is estimated that the new machine will produce annual cost savings of $88,400. The old machine can be sold to a scrap dealer for $8,800. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. < Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) GA $ tA New Machine tA $384,800 $ 5 years Retain Equipment purchase the new machine. $ $ LA Replace Equipment tA $ Net Income Increase/(Decrease)
Transcribed Image Text:Crane Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: Original purchase cost Accumulated depreciation Estimated life Old Machine $353,600 The company 239,200 5 years > It is estimated that the new machine will produce annual cost savings of $88,400. The old machine can be sold to a scrap dealer for $8,800. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. < Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter O for the amounts.) GA $ tA New Machine tA $384,800 $ 5 years Retain Equipment purchase the new machine. $ $ LA Replace Equipment tA $ Net Income Increase/(Decrease)
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