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

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Definitions:

Cognitive Theory

A psychological approach that emphasizes the importance of thought processes in understanding behavior and mental states.

Posttraumatic Stress Disorder

A mental health condition triggered by experiencing or witnessing a traumatic event, characterized by flashbacks, nightmares, and severe anxiety.

Environmental Factors

External elements such as climate, pollution, and socioeconomic conditions that can influence an individual's health, behavior, and development.

Social Factors

Elements that influence individuals' living conditions, behaviors, and life chances, including socioeconomic status, education, and family dynamics.