A machine purchased three years ago for $311,000 has a current book value using straight-line depreciation of $180,000; its operating expenses are $39,000 per year. A replacement machine would cost $222,000, have a useful life of nine years, and would require $10,000 per year in operating expenses. It has an expected salvage value of $79,000 after nine years. The current disposal value of the old machine is $89,000; if it is kept 9 more years, its residual value would be $17,000. Required Calculate the total costs in keeping the old machine and purchasing a new machine. Should the old machine be replaced? Keep Old Purchase New Machine Machine Total costs Should the old machine be replaced?

A machine purchased three years ago for $311,000 has a current book value using straight-line depreciation of $180,000; its operating expenses are $39,000 per year. A replacement machine would cost $222,000, have a useful life of nine years, and would require $10,000 per year in operating expenses. It has an expected salvage value of $79,000 after nine years. The current disposal value of the old machine is $89,000; if it is kept 9 more years, its residual value would be $17,000. Required Calculate the total costs in keeping the old machine and purchasing a new machine. Should the old machine be replaced? Keep Old Purchase New Machine Machine Total costs Should the old machine be replaced?

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter18: Accounting For Long-term Assets

Section: Chapter Questions

Problem 3CE: A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years....

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