Ignoring Tax Consequences, How Should the Gain or Loss on Disposal

question 27

Multiple Choice

Ignoring tax consequences, how should the gain or loss on disposal of an old machine be treated in an equipment replacement decision?

• A)used to defray installation costs of the new machine
• B)deducted from the accumulated amortization
• C)deducted from the cost of the new machine
• D)added to the accumulated amortization (or deducted from the cost)of the old machine
• E)It is irrelevant.

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Definitions:

Hourly Wage

Compensation paid to an employee calculated on a per-hour basis.

Gross Pay

Total income earned by an employee before any deductions or taxes are applied.

Overtime

Additional hours worked beyond the standard work hours, typically compensated at higher pay rates.

Time And A Half

Compensation rate that is 1.5 times the employee's regular hourly rate, typically paid for overtime work.