Which of the following is true in a decision to keep or replace existing equipment?
A) The book value of the old equipment is relevant.
B) The disposal value of the old equipment is relevant.
C) Property taxes is relevant.
D) Depreciation on the new equipment is relevant.

Question

Quizplus · Accepted Answer

The disposal value of the old equipment should be considered because it represents the amount that can be received if the equipment is sold or traded in. The book value is not as relevant because it only reflects the original cost of the equipment minus accumulated depreciation. Property taxes and depreciation on the new equipment are not directly relevant in this decision.

Which of the Following Is True in a Decision to Keep