Delaney Company is considering replacing equipment that originally cost $600,000 and that has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation?
A) $370,000
B) $790,000
C) $180,000
D) $190,000

Question

Quizplus · Accepted Answer

Sunk cost is the original cost of the equipment minus its accumulated depreciation, which is $600,000 - $420,000 = $180,000.

Delaney Company Is Considering Replacing Equipment That Originally Cost $600,000