Pascal Ltd intends to tender for a contract to make warning triangles to be carried in cars in the event of a breakdown. The contract will last for one year and will require the use of a machine that is already held. The machine cost £120,000 and has a carrying value of £70,000. The annual depreciation charge is £25,000 per year. It is estimated that the current market value is £50,000 and that it could be sold in one year's time for £20,000. What is the relevant cost of using the machine for the purposes
Pascal Ltd intends to tender for a contract to make warning triangles to be carried in cars in the event of a breakdown. The contract will last for one year and will require the use of a machine that is already held. The machine cost £120,000 and has a carrying value of £70,000. The annual depreciation charge is £25,000 per year. It is estimated that the current market value is £50,000 and that it could be sold in one year's time for £20,000. What is the relevant cost of using the machine for the purposes
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Pascal Ltd intends to tender for a contract to make warning triangles to be carried in cars in the event of a breakdown. The contract will last for one year and will require the use of a machine that is already held. The machine cost
depreciation charge is
£120,000
and has a carrying value of
£70,000.
The annual £25,000
per year. It is estimated that the current market value is
£50,000
and that it could be sold in one year's time for
£20,000.
What is the relevant cost of using the machine for the purposes of the tender?
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