Ernie Company Is Considering Replacing a Machine That Is Currently

question 86

Multiple Choice

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

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Definitions:

Ownner's Equity

The portion of a company's assets that belongs to the owners or shareholders after liabilities are subtracted; also known as shareholder's equity.

Total Liabilities

The combined amount of obligations a company owes to external parties, including loans, accounts payable, mortgages, and other debts due within one year or beyond.

Owner's Equity

The residual interest in the assets of the entity after subtracting liabilities, representing the owner's claim on the business assets.

Total Assets

The sum of all assets owned by a company, including cash, investments, property, and equipment.