Xu Company is considering replacing one of its manufacturing machines The machine has a book value of $45,000 and a remaining useful life of 4 years, at which time its salvage value will be zero It has a current market value of $55,000 Variable manufacturing costs are $34,000 per year for this mach...

Alternative A Increase or Decrease in Net Income Cost to ...

Xu Company is considering replacing one of its manufacturing machines. The machine has a book value of

Question:

Xu Company is considering replacing one of its manufacturing machines. The machine has a book value of $45,000 and a remaining useful life of 4 years, at which time its will be zero. It has a current market value of $55,000. Variable manufacturing costs are $34,000 per year for this machine. Information on two alternative replacement machines follows. Should Xu keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xupurchase?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...