Granfield Company has a piece of manufacturing equipment with a book value of $40,000 and a remaining useful life of fou
Posted: Sun Jun 05, 2022 7:05 pm
Granfield Company has a piece of manufacturing equipment with a
book value of $40,000 and a remaining useful life of four years. At
the end of the four years the equipment will have a zero-salvage
value. Granfield can purchase new equipment for $120,000 and
receive $22,000 in return for trading in its current equipment. The
current equipment has variable manufacturing costs of $39,000 per
year. The new equipment will reduce variable manufacturing costs by
$19,000 per year over its four-year life. The total increase or
decrease in income by replacing the current equipment with the new
equipment is:
book value of $40,000 and a remaining useful life of four years. At
the end of the four years the equipment will have a zero-salvage
value. Granfield can purchase new equipment for $120,000 and
receive $22,000 in return for trading in its current equipment. The
current equipment has variable manufacturing costs of $39,000 per
year. The new equipment will reduce variable manufacturing costs by
$19,000 per year over its four-year life. The total increase or
decrease in income by replacing the current equipment with the new
equipment is: