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Exercise 6-20A (Static) Asset replacement decision LO 6-5 Kahn Company paid $240,000 to purchase a machine on January 1,
Posted: Fri Jul 01, 2022 8:45 am
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- Exercise 6 20a Static Asset Replacement Decision Lo 6 5 Kahn Company Paid 240 000 To Purchase A Machine On January 1 1 (23.56 KiB) Viewed 20 times
Exercise 6-20A (Static) Asset replacement decision LO 6-5 Kahn
Company paid $240,000 to purchase a machine on January 1, Year 1. During Year 3, a technological breakthrough resulted in the development of a new machine that costs $300,000. The old machine costs $100,000 per year to operate, but the new machine could be operated for only $36,000 per year. The new machine, which will be available for delivery on January 1, year 3, has an expected useful life of four years. The old machine is more durable and is expected to have a remaining useful life of four years. The current market value of the old machine is $80,000. The expected salvage value of both machines is zero. Required Calculate the total avoidable costs in keeping the old machine and buying a new machine. Should the machine be replaced? Keep Oid Total avoidable costs Should the machine be replaced? Buy New