The following are futuro cash flows projected for an item of machinery (1) $200,000 to be incurred in three years tim e which will extend the life of the machine by a further five years (2)$55.000 annual revenue from products produced by the machine (2) $6,000 of finance costs on a bank loan taken out to purchase the machine (4) $60,000 maintenance costs to be incurred in 12 months time Which of the above cash flows are relevant to the calculation of the machines value in use

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
The following are futuro cash flows projected for an item of machinery (1) $200,000 to be incurred in three years tim e which will extend the life of the machine by a further five years (2)$55.000 annual revenue from products produced by the machine (2) $6,000 of finance costs on a bank loan taken out to purchase the machine (4) $60,000 maintenance costs to be incurred in 12 months time Which of the above cash flows are relevant to the calculation of the machines value in use
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education