Samantha Company Is Considering Replacing a Machine That Is Presently

question 64

Multiple Choice

Samantha Company is considering replacing a machine that is presently used in the production of its product. The following data are available: $\begin{array}{lll}& \text { Old Machine } & \begin{array} { l } \text { R eplacem } \\\text { M achine }\end{array} \\\text { Original cost } & \$ 67,000 & \$ 54,000 \\\text { Useful life in years } & 13 & 4 \\\text { Current age in years } & 9 & 0 \\\text { Book value } & \$ 32,000 & - \\\text { Disposal value now } & \$ 18,000 & - \\\text { Disposal value in 5 years } & 0 & 0 \\\text { Annual cash operating } & \$ 9,000 & \$ 7,000\\\text { costs}\end{array}$ is irrelevant.

• A) The disposal value of the old machine
• B) The annual operating cost of the old machine
• C) The disposal value in five years
• D) The original cost of the replacement machine

---

Definitions:

Financial Statements

Documents that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement.

Retrospective Adjustments

Adjustments made to the financial statements of previous periods to correct errors or to reflect a more accurate representation of the financial position.

Accounting Principle

Fundamental guidelines or rules that govern the accounting process, ensuring that financial statements are fair, consistent, and comprehensive.

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period.