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Replacement Equipment $112,000 95,000 12,000 Cost Operating expenses Salvage value Useful life 6 years

Replacement Equipment $112,000 95,000 12,000 Cost Operating expenses Salvage value Useful life 6 years

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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Exercise 13-19A (Algo) Asset replacement decision LO 13-5 Rundle Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows. Existing Equipment Cast Operating expenses Salvage value Market value Book value Remaining useful life $113,000 118,000 Old 21,000 55,000 33,000 Total cost Should the equipment be replaced? 6 years Replacement Equipment "The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment Cost Operating expenses Salvage value Useful life Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? New $112,000 96,000 12,000 6 years
Transcribed Image Text:Exercise 13-19A (Algo) Asset replacement decision LO 13-5 Rundle Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows. Existing Equipment Cast Operating expenses Salvage value Market value Book value Remaining useful life $113,000 118,000 Old 21,000 55,000 33,000 Total cost Should the equipment be replaced? 6 years Replacement Equipment "The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment Cost Operating expenses Salvage value Useful life Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? New $112,000 96,000 12,000 6 years
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