Problem 6. Retain or replace an old asset-1.Point Products, Inc., has an opportunity to acquire a new equipment to replace one of itsexisting equipment. The following data are gathered relative to the new and old assets:OldBook valuePurchase priceLife in yearsSalvage value - currentSalvage value - after 5 yearsVariable operating expenses per yrShould the company retain or replace its old equipment?P700,0005 years50,000none1,300,000New1,200,0005 yearsnone1,000,000

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Business

Accounting

Should the company retain or replace its old equipment?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 13PB: Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and...

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Question

Problem 6. Retain or replace an old asset-1.
Point Products, Inc., has an opportunity to acquire a new equipment to replace one of its
existing equipment. The following data are gathered relative to the new and old assets:
Old
Book value
Purchase price
Life in years
Salvage value - current
Salvage value - after 5 years
Variable operating expenses per yr
Should the company retain or replace its old equipment?
P
700,000
5 years
50,000
none
1,300,000
New
1,200,000
5 years
none
1,000,000

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