Smith Industries Is Considering Replacing a Machine That Is Presently

question 114

Multiple Choice

Smith Industries is considering replacing a machine that is presently used in its production process.
Which of the following is irrelevant to the replacement decision?

Which of the information provided in the table is irrelevant to the replacement decision?

• A)the sales price of the new machine
• B)the original cost of the old machine
• C)the current disposal value of the old machine
• D)the annual cash operating costs

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Definitions:

Impairment Loss

A reduction in the book value of an asset when its fair market value falls below its carrying amount on the balance sheet, indicating a permanent decline in value.

Accumulated Depreciation

Represents the total depreciation expenses charged against a fixed asset since it was put into use, reflecting its decrease in value over time.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, reducing its book value.

Gain of $2,000

Represents an increase in wealth or resources, typically accounted for in financial statements when an asset is sold for more than its cost.