ANSWER THE FOLLOWING QUESTIONS WITH FULL EXPLANATION AND STEP

QNO.1

Four years ago A. ltd purchase a leather cutting machine costing $30,000 and depreciate it using fixed installment method. Company can save annual operating expenses of $5,400 if old machinery is replaced by the new one. Old machinery has only one year remaining life and A. ltd. Can purchase the new machinery for $4,000, but it would last only a year. Company thinks that it bears the loss of $600 if new machinery purchased that is why company is against the purchase of new machinery. Required: What you think that Company analysis is correct or wrong. Justify your answer.