Sim Company is considering whether to replace some of its manufacturing equipment. Information pertaining to the existing
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Based on this information, recommend whether to replace the equipment. Support your recommendation with appropriate computations.
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Exlsting Equlpment Replacement Equipment Cost Operating expenses* Salvage value Market value Book value Remaining useful life $30,000 Cost 24,000 Operating expenses 4,000 Salvage value 8,500 10,500 $27,000 4,000 8,000 10 years Useful life 10 years The amounts shown for operating expenses are the cumulative total of all such expenses expected to be incurred over the useful life of the equipment.
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The opportunity cost of using the existing equipment is its market value less the salvage value 8500 ...View the full answer
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Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds
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