Price Accumulated Depreciation Remaining useful life Useful life Annual operating costs Old Machine $240000 72000 10 years -0- a $192000 New Machine $480000 -0- -0- 10 years $144000
Price Accumulated Depreciation Remaining useful life Useful life Annual operating costs Old Machine $240000 72000 10 years -0- a $192000 New Machine $480000 -0- -0- 10 years $144000
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter9: Depreciation (deprec)
Section: Chapter Questions
Problem 1R: Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an...
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Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Question
![Sheridan Company is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Price
Accumulated
Depreciation
Remaining useful
life
Useful life:
Annual operating
costs
Old Machine
$240000
72000
10 years
$192000
New Machine
$480000
-0-
10 years
$144000
If the old machine is replaced, it can be sold for $19200. The company uses straight-line depreciation with a zero salvage value for all
of its assets.
Which of the following amounts is relevant to the replacement decision?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbfbce359-e0c2-41bf-b1fc-85d1fd285cdd%2F26d4c8fe-54c9-4bf0-b4e7-839c41c40736%2Fjdylq2_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Sheridan Company is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Price
Accumulated
Depreciation
Remaining useful
life
Useful life:
Annual operating
costs
Old Machine
$240000
72000
10 years
$192000
New Machine
$480000
-0-
10 years
$144000
If the old machine is replaced, it can be sold for $19200. The company uses straight-line depreciation with a zero salvage value for all
of its assets.
Which of the following amounts is relevant to the replacement decision?
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