Gull CorpIs Considering Selling Its Old Popcorn Machine and Replacing It

question 147

Essay

Gull Corp.is considering selling its old popcorn machine and replacing it with a newer one.The old machine has a book value of $5,000 and its remaining useful life is 5 years.Annual costs are $4,000.A high school is willing to buy it for $2,000.New equipment would cost $18,000 with annual operating costs of $1,500.The new machine has an estimated useful life of 5 years.
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Should the machine be replaced?

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Definitions:

Cash Account

An account that records all transactions involving cash inflows and outflows.

Cash Payments

Transactions where payment for goods, services, or obligations is made using physical currency or checks instead of digital means.

Collections

The act of receiving payments for bills or accounts receivable, often referring to efforts made to gather overdue payments.

Reconciling Items

Adjustments made to reconcile differences between two sets of records or accounts, often used in the context of comparing bank statements to internal records.