Which one of the following is most relevant to an equipment-replacement decision (assume no tax effects) used in a trade or business?
A) Original cost of the old equipment.
B) Current disposal (salvage) value of the old equipment.
C) Gain or loss on the disposal of the old equipment.
D) Original cost less accumulated depreciation of the old equipment.
E) A lump-sum write-off amount from the disposal of the old equipment.

Question

Which one of the following is most relevant to an equipment-replacement decision (assume no tax effects) used in a trade or business? 
A) Original cost of the old equipment.
B) Current disposal (salvage) value of the old equipment.
C) Gain or loss on the disposal of the old equipment.
D) Original cost less accumulated depreciation of the old equipment.
E) A lump-sum write-off amount from the disposal of the old equipment.

Quizplus · Accepted Answer

The current disposal (salvage) value of the old equipment is most relevant to an equipment-replacement decision because it represents the actual cash inflow or savings that would be realized from disposing of the old equipment, which directly impacts the analysis of whether to replace the equipment.

Which One of the Following Is Most Relevant to an Equipment-Replacement