In a decision to keep or replace existing equipment, ________ is a FALSE statement.
A)the book value of the old equipment is irrelevant
B)the disposal value of the old equipment is irrelevant
C)the cost of the new equipment is relevant
D)depreciation on the new equipment is relevant

Question

Quizplus · Accepted Answer

The disposal value of the old equipment is a relevant factor as it provides insight into the salvage value that can be obtained from selling the old equipment. The book value of the old equipment may also be considered as it can affect the tax implications of replacing the equipment. The cost of the new equipment and the depreciation on the new equipment are both relevant factors in the decision-making process.

In a Decision to Keep or Replace Existing Equipment, ________