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6.6   Questions 1) Equipment to be sold has a book value

Question : 6.6   Questions 1) Equipment to be sold has a book value : 1419235

 

6.6   Questions

 

1) Equipment to be sold has a book value of $4,000. The cost of the equipment is $10,000. The cash received at sale is $2,000. What is the gain or loss on disposal of the equipment?

A) loss on disposal of $2,000

B) loss on disposal of $4,000

C) loss on disposal of $6,000

D) gain on disposal of $2,000

 

2) When considering the replacement of old equipment, which of the following item is relevant?

A) loss on disposal of old equipment

B) book value of old equipment

C) accumulated depreciation on old equipment

D) future maintenance costs of old equipment

3) Book value on a depreciable asset is defined as ________.

A) residual value less cost

B) residual value less accumulated depreciation

C) cost less accumulated depreciation

D) residual value

 

4) Which of the following costs is NOT relevant to an equipment replacement decision?

A) cost of new equipment

B) operating cost of new equipment

C) operating cost of old equipment(several years left)

D) cost of old equipment

 

5) Which of the following cost is relevant to an equipment replacement decision?

A) cost of old equipment

B) cost of new equipment

C) book value of old equipment

D) depreciation expense on old equipment

 

6) BEE Company is considering the replacement of a machine that is presently used in production. Which of the following items are irrelevant to the replacement decision?

A) annual operating cost of the old machine (2 years left)

B) original cost of the new machine

C) disposal value of the old machine at time of replacement

D) original cost of old machine

7) Ernie Company is considering replacing a machine that is currently used in the production process. The ________ is irrelevant to the replacement decision.

A) cost of the new machine

B) disposal value of old machine

C) book value of old machine

D) annual operating cost of old machine (2 years left)

 

8) Benson Company is considering the replacement of a machine that is presently used in production. The following data are available:

 

Old Machine                                            New Machine

Original cost$57,000$35,000

Useful life in years175

Current age in years120

Book value$39,000-

Disposal value now$8,000-

Disposal value in 5 years00

Annual cash operating costs$7,000$4,000

 

Adding all five years together, the total relevant costs to consider if the new machine is purchased is ________.

A) $12,000

B) $27,000

C) $47,000

D) $55,000

9) Gray Lake Company is considering the replacement of a machine that is presently used in production. The following data are available:

 

Old Machine                   New Machine

Original cost$57,000$35,000

Useful life in years175

Current age in years120

Book value$39,000-

Disposal value now$8,000-

Disposal value in 5 years00

Annual cash operating costs$7,000$4,000

 

Adding all five years together, the total relevant costs to consider if the old machine is not replaced is ________.

A) $22,000

B) $31,000

C) $35,000

D) $39,000

 

10) Inverness Company is considering the replacement of a machine that is presently used in production. The following data are available:

 

Old Machine                   New Machine

Original cost$57,000$35,000

Useful life in years175

Current age in years120

Book value$39,000-

Disposal value now$8,000-

Disposal value in 5 years00

Annual cash operating costs$7,000$4,000

 

Adding all five years together, what is the difference in total relevant costs between the old machine and the new machine?

A) $12,000

B) $15,000

C) $22,000

D) $37,000

 

 

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