W&M paid $179,000, in cash, for equipment three years ago and spent $18,000 for equipment upgrades last year. The company no longer uses this equipment and has received a cash offer of $68,000 from a buyer. The current book value of the equipment, including all updates, is $54,500. What value, if any, should the company assign to this equipment should it decide to use the equipment for a new project?

Question

Quizplus · Accepted Answer

The company should assign the opportunity cost of $68,000, which is the cash offer received, as the value of the equipment for the new project.

W&M Paid $179,000, in Cash, for Equipment Three Years Ago