Sanchez Company Is Considering Replacing Equipment That Originally Cost $300,000

question 95

Multiple Choice

Sanchez Company is considering replacing equipment that originally cost $300,000 and that has $280,000 accumulated depreciation to date.A new machine will cost $450,000.What is the sunk cost in this situation?

• A)$150,000
• B)$280,000
• C)$20,000
• D)$300,000

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Definitions:

Limited Liability

A legal structure that limits the financial responsibility of an organization's owners or shareholders to the amount they have invested in the company.

Aggregate Theory

A theory in partnership law that holds that a partnership is actually a conglomeration of the partners rather than a separate legal person with its own legal identity.

Flesh and Blood

A phrase used to denote a living human being, often emphasizing common human nature or familial bonds.