When a Business Is Considering Whether to Replace Old Equipment

question 126

True/False

When a business is considering whether to replace old equipment with newer equipment, the original cost of the old equipment-compared to the cost of the new equipment-is information relevant to the business decision.

---

Definitions:

Pension Expense

The cost recognized in an accounting period related to the company's pension plan, including both the cash contributions and the change in pension obligation.

Vacation Pay Payable

Liabilities owed to employees for earned but unused vacation time, expected to be paid out in the future.

Vacation Pay Expense

The cost recognized by businesses for providing vacation benefits to employees, accounted for in the period employees earn the vacation time.

Product Warranty Expense

Costs associated with repairing or replacing products under warranty, recognized as an expense by companies.