Sooky has a spotter truck with a book value of $46,000 and a remaining useful life of five years. At the end ofthe five years the spotter truck will have a zero-salvage value. iSooky can purchase a new spotter truck for$126,000 and receive $31,600 in return for trading in its old spotter truck. The old spotter truck has variablemanufacturing costs of $81,000 per year. The new spotter truck will reduce variable manufacturing costs by$25,600 per year over the five-year life of the new spotter truck. The total increase or decrease in income byreplacing the current spotter truck with the new truck is:

A rise in the total profit a company makes from its main activities is referred to as an increase in…

k will have a zero-salvage value. iSooky O in return for trading in its old spotter tra 00 per year. The new spotter truck will res "e-year life of the new spotter truck. The f truck with the new truck is:

k will have a zero-salvage value. iSooky O in return for trading in its old spotter tra 00 per year. The new spotter truck will res "e-year life of the new spotter truck. The f truck with the new truck is:

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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Question

Sooky has a spotter truck with a book value of $46,000 and a remaining useful life of five years. At the end of
the five years the spotter truck will have a zero-salvage value. iSooky can purchase a new spotter truck for
$126,000 and receive $31,600 in return for trading in its old spotter truck. The old spotter truck has variable
manufacturing costs of $81,000 per year. The new spotter truck will reduce variable manufacturing costs by
$25,600 per year over the five-year life of the new spotter truck. The total increase or decrease in income by
replacing the current spotter truck with the new truck is:

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