In a retain or replace equipment decision trade-in allowance available on old equipment
A) increases the cost of the new equipment.
B) is relevant because it will not be realized if the old equipment is retained.
C) is not relevant to the decision.
D) reduces the cost of the old equipment.

Question

Quizplus · Accepted Answer

The trade-in allowance available on old equipment is relevant because it represents a potential future cash inflow that will not be realized if the old equipment is retained. Therefore, it should be considered in the decision to retain or replace equipment.

In a Retain or Replace Equipment Decision Trade-In Allowance Available