Kimmel, Accounting, 6e INTRODUCTORY ACCOUNTING I/II (ACT 22 Assignment Gradebook

Question

Kimmel, Accounting, 6e INTRODUCTORY ACCOUNTING I/II (ACT 22 Assignment Gradebook ORION Downloadable eTextbook nt 3:09 PMRemaining: 93 min. CALCULATOR FULL SCREEN PRINTER VERSION BACK Question 1 Sunland Company is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Purchase price Accumulated depreciation Annual operating costs If the old equipment is replaced now, it can be sold for $111600. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line $312000 124800 419000 $512000 0 354000 depreciation with a zero salvage value for all of its assets The net advantage (disadvantage) of replacing the old equipment with the new equipment is $512000 $107000 O $(75400) O $(200000) Click if you would like to Show Work for this question Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANS

Explanation / Answer

Correct option - option C ( $75,400)

a New equipment Cost $        512,000 b Selling price old equipment $        111,600 c Net initial additional Cost (a-b) $        400,400 d Old machine cost $        419,000 e New machine cost $        354,000 f Net saving per year (d-e) $          65,000 g No of years 5 h Total Savings in cost (f*g) $        325,000 i Net advantage (h-c) $        (75,400)

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