Which of the Following Statements Regarding a Decision to Keep

question 102

Multiple Choice

Which of the following statements regarding a decision to keep existing equipment or replace it is false?

• A) The disposal value of the old equipment is irrelevant.
• B) The book value of the old equipment is irrelevant.
• C) The cost of the new equipment is relevant.
• D) Depreciation on the new equipment is relevant.

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Definitions:

Accounting Equation

Assets equal liabilities plus owners’ equity.

Net Income

The total profit (or loss) after all expenses, including taxes, have been deducted from revenue; also called net earnings.