Asset Replacement An uninsured boat costing $98,000 was wrecked the first day it was used. It can be either sold as-is for $9,800 cash and replaced with a similar boat costing $100,000 or rebuilt for $83,000 and be brand new as far as operating characteristics and looks are concerned. Required: What is the difference in cost between the two options? Based on financial considerations, what should the company do? multiple choice Sell as-is for $9,800 cash and replace with a similar boat costing $100,000. Rebuild for $83,000.
Asset Replacement An uninsured boat costing $98,000 was wrecked the first day it was used. It can be either sold as-is for $9,800 cash and replaced with a similar boat costing $100,000 or rebuilt for $83,000 and be brand new as far as operating characteristics and looks are concerned. Required: What is the difference in cost between the two options? Based on financial considerations, what should the company do? multiple choice Sell as-is for $9,800 cash and replace with a similar boat costing $100,000. Rebuild for $83,000.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 9E: Machine replacement decision A company is considering replacing an old piece of machinery, which...
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Asset Replacement An uninsured boat costing $98,000 was wrecked the first day it was used. It can be either sold as-is for $9,800 cash and replaced with a similar boat costing $100,000 or rebuilt for $83,000 and be brand new as far as operating characteristics and looks are concerned.
Required:
What is the difference in cost between the two options?
Based on financial considerations, what should the company do?
multiple choice
-
Sell as-is for $9,800 cash and replace with a similar boat costing $100,000.
-
Rebuild for $83,000.
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