In early 2014, Gia Minerals Company purchased a large excavator for use in its strip-mining operations at a cost $400,000. It is now December 2014, and the company is preparing its year-end financial statements. An appraiser has gathered the following information related to the excavator:

1. To replace the excavator today would cost $415,000.
2. The net present value of cash flows generated by the excavator over the remainder of its useful life equal
$550,000.
3. A recent appraisal of the excavator for insurance purposes valued the machine at $410,000.

Question

In early 2014, Gia Minerals Company purchased a large excavator for use in its strip-mining operations at a cost $400,000. It is now December 2014, and the company is preparing its year-end financial statements. An appraiser has gathered the following information related to the excavator:

1. To replace the excavator today would cost $415,000.
2. The net present value of cash flows generated by the excavator over the remainder of its useful life equal
$550,000.
3. A recent appraisal of the excavator for insurance purposes valued the machine at $410,000.

Quizplus · Accepted Answer

The Answer of In early 2014, Gia Minerals Company purchased a large excavator for use in its strip-mining operations at a cost $400,000. It is now December 2014, and the company is preparing its year-end financial statements. An appraiser has gathered the following information related to the excavator:

1. To replace the excavator today would cost $415,000.
2. The net present value of cash flows generated by the excavator over the remainder of its useful life equal
$550,000.
3. A recent appraisal of the excavator for insurance purposes valued the machine at $410,000.

In Early 2014, Gia Minerals Company Purchased a Large Excavator