Ferris Company Has an Old Machine That Is Fully Depreciated

question 66

Essay

Ferris Company has an old machine that is fully depreciated but has a current salvage value of $5,000.The company wants to purchase a new machine that would cost $60,000 and have a 5-year useful life and zero salvage value.Expected changes in annual revenues and expenses if the new machine is purchased are:

---

Definitions:

Annual Contributions

Regular amounts added to an investment, savings account, or retirement fund once every year.

Compounded Semi-Annually

Interest that is compounded semi-annually is applied to the principal amount twice a year, leading to an increase in the overall amount of interest earned compared to simple interest.

RRSP

Registered Retirement Savings Plan, a tax-deferred account aimed at helping Canadians save for retirement.

Annual Contributions

Payments or deposits made into a financial account or investment plan once every year.