ISooky Has a Spotter Truck with a Book Value of $40,000

question 113

Multiple Choice

iSooky has a spotter truck with a book value of $40,000 and a remaining useful life of five years.At the end of the five years the spotter truck will have a zero salvage value.The market value of the spotter truck is currently $32,000.iSooky can purchase a new spotter truck for $120,000 and receive $31,000 in return for trading in its old spotter truck.The new spotter truck will reduce variable manufacturing costs by $25,000 per year over the five-year life of the new spotter truck.The total increase or decrease in income by replacing the current spotter truck with the new truck (ignoring the time value of money) is:

• A)$31,000 decrease
• B)$31,000 increase
• C)$36,000 decrease
• D)$120,000 decrease
• E)$36,000 increase

---

Definitions:

John Winthrop

A prominent Puritan leader and the first governor of the Massachusetts Bay Colony, remembered for his vision of the colony as a "city upon a hill," emphasizing a society governed by religious principles.

Civil Liberty

The rights of citizens to freedom of speech, privacy, and fair treatment under law, as protected by the constitution and other legal provisions.

Federal Liberty

The rights and freedoms guaranteed at a national level by a country's constitution or laws.