Hare Construction Inc. has a machine that is wearing out and needs to be replaced. It has a book value of $8,000, with accumulated depreciation of $48,000. The machine can be sold for 10% of the original purchase value.
In order to meet production needs, the machine needs to be replaced with a newer model that costs $60,000, and will be depreciated by $5,000 in the first year.
What is the net amount that will be spent on Equipment in the coming period?

Question

Hare Construction Inc. has a machine that is wearing out and needs to be replaced. It has a book value of $8,000, with accumulated depreciation of $48,000. The machine can be sold for 10% of the original purchase value. 
In order to meet production needs, the machine needs to be replaced with a newer model that costs $60,000, and will be depreciated by $5,000 in the first year.
What is the net amount that will be spent on Equipment in the coming period?

Quizplus · Accepted Answer

The Answer of Hare Construction Inc. has a machine that is wearing out and needs to be replaced. It has a book value of $8,000, with accumulated depreciation of $48,000. The machine can be sold for 10% of the original purchase value. 
In order to meet production needs, the machine needs to be replaced with a newer model that costs $60,000, and will be depreciated by $5,000 in the first year.
What is the net amount that will be spent on Equipment in the coming period?