Electrical Engineering Equipment Ltd. purchased a machine for $100,000; current accumulated amortization totals $40,000. Management is contemplating the purchase of a new machine for $120,000. Current disposal of the old machine would cost $65,000. What is the correct category for each item?

A) Irrelevant: $100,000 cost of old machine, $40,000 accumulated amortization, $5,000 gain on sale; Relevant: $120,000 cost of new machine, $65,000 disposal of old machine.

B) Irrelevant: $120,000 of new machine, $40,000 accumulated amortization; Relevant: $100,000 cost of old machine, $65,000 of disposal of old machine, $5,000 gain on sale.

C) Irrelevant: $100,000 cost of old machine, $40,000 accumulated amortization; Relevant: $120,000 cost of new machine, $5,000 gain on sale, $65,000 disposal of old machine.

D) Irrelevant: $100,000 cost of old machine, $60,000 book value of old machine; Relevant: $120,000 cost of new machine, $65,000 disposal of old machine, $5,000 gain on sale.

E) Irrelevant: $120,000 cost of new machine, $65,000 disposal of old machine. Relevant: $100,000 cost of old machine, $60,000 book value of old machine, $5,000 gain on sale.

Answer rating: 100% (QA)

d Irrelevant 100000 cost of old machine 60000 book value of old ma... View the full answer