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Should the following be ignored, or rather added or subtracted from the new machine’s purchase price when estimating initial cash outflow? When estimating the machine’s depreciable basis? a. The old machine is saleable at S500 in the market. b. Book value of the old machine is $300, it still has 1 year of depreciable life and 2 years of useful life. c. Replacement of the old machine with the new one will require $ 1500 additional investment in inventory d. Shipment and installation of the new machine at the plant site will incur $ 400 e. Training of the machine operator will cost $ 350

Should the following be ignored, or rather added or subtracted from the new machine’s purchase price when estimating initial cash outflow? When estimating the machine’s depreciable basis? a. The old machine is saleable at S500 in the market. b. Book value of the old machine is $300, it still has 1 year of depreciable life and 2 years of useful life. c. Replacement of the old machine with the new one will require $ 1500 additional investment in inventory d. Shipment and installation of the new machine at the plant site will incur $ 400 e. Training of the machine operator will cost $ 350

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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Should the following be ignored, or rather added or subtracted from the new machine’s
purchase price when estimating initial cash outflow? When estimating the machine’s depreciable
basis?
a. The old machine is saleable at S500 in the market.
b. Book value of the old machine is $300, it still has 1 year of depreciable life and 2 years of
useful life.
c. Replacement of the old machine with the new one will require $ 1500 additional investment
in inventory
d. Shipment and installation of the new machine at the plant site will incur $ 400
e. Training of the machine operator will cost $ 350

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