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

question 65

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 costs not relevant to the decision of whether or not to replace the spotter truck are:

• A)$31,000.
• B)$25,000.
• C)$125,000.
• D)$120,000.
• E)$40,000.

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